Discharge of building contract in Nigeria
Discharge of building contract in Nigeria
By
OLATUNBOSUN OLUWASEUN MAYOWA
MATRIC NO: - ARC/05/5635
And
BABALOLA OLUWASEUN NIRAN
MATRIC NO: - ARC/05/5602
Submitted to:THE DEPARTMENT OF ARCHITECTURE
SCHOOL OF ENVIRONMENTAL TECHNOLOGY (SET)
FEDERAL UNIVERSITTY OF TECHNOLOGY, AKURE
ONDO STATE, NIGERIA.
IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE
AWARD OF BACHELOR IN TECHNOLOGY
(B.TECH)
LECTURER:
Prof. O.O OGUNSOTE.
NOV, 2009.
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Discharge of building contract in Nigeria
TABLE OF CONTENTS
Title
Page
Title Page
i
Table of contents
ii
CHAPTER ONE
Page
1.0 Discharge of contracts
1
1.1 Methods of Discharging Contracts
2
1.2 Discharge by Performance
2
1.2.1 Conditional Performance
2
1.2.2 Contractual Performance
3
1.3 Discharge by Agreement
4
1.4 Discharge by Impossibility or Frustration
7
1.4.1 Government Intervention or Supervening illegality
8
1.4.2
8
Effect of Frustration
1.5 Discharge by Breach.
8
1.5.1 Remedies
9
1.5.2 When is breach enough to discharge contract?
11
1.6 Exemption or Exclusion Clauses
12
1.6.1 The control of exemption clauses
13
1.6.2 Incorporation
15
1.6.2.1 Signed Documents
15
1.6.2.2 Notice
16
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Discharge of building contract in Nigeria
1.6.3 Interpretation
18
1.6.4 Unsigned Documents
18
1.6.4.1 Contract Proferentum rule
18
1.6.2.2 The Fundamental Obligation Theory
19
1.6.4.3 Contracts and Third Parties
23
1.7 Assignment (law)
24
1.8 Discharge by operation of law
29
REFERENCES
30
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Discharge of building contract in Nigeria
CHAPTER ONE
1.0 Discharge of Contracts
The duties under a contract are discharged when there is a legally binding termination of
such duty by a voluntary act of the parties or by operation of law. Among the ways to discharge a
contractual duty is impossibility or impracticability to perform personal services because of
death or illness; or impossibility caused by the other party.
The two most significant methods of voluntary discharge are accord and satisfaction and
novation. An accord is an agreement to accept some performance other than that which was
previously owed under a prior contract. Satisfaction is the performance of the terms of that
accord. Both elements must occur in order for there to be discharge by these means. A novation
involves the substitution of a new party while discharging one of the original parties to a contract
by agreement of all three parties. A new contract is created with the same terms as the original
one, but the parties are different.
Contractual liability may be voluntarily discharged by the agreement of the parties, by
estoppel, and by the cancellation, intentional destruction, or surrender of a contract under seal
with intent to discharge the duty. The discharge of a contractual duty may also occur by
operation of law through illegality, merger, statutory release, such as a discharge in bankruptcy,
and objective impossibility. Merger takes place when one contract is extinguished because it is
absorbed into another.
There are two types of impossibility of performance that discharge the duty of
performance under a contract. Subjective impossibility is due to the inability of the individual
promisor to perform, such as by illness or death. Objective impossibility means that no one can
render the performance. The destruction of the subject matter of the contract, the frustration of its
purpose, or supervening impossibility after the contract is formed is types of objective
impossibility. "Impracticability" because of extreme and unreasonable difficulty, expense, injury,
or loss involved is considered part of impossibility.
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Discharge of building contract in Nigeria
1.1 Methods of Discharging Contracts
There are 4 main methods of discharging contractual obligations namely:
1. Discharge by performance
2. Discharge by agreement
3. Discharge by impossibility or frustration
4. Discharge by breach.
1.2 Discharge by Performance
This is the commonest way of discharging a contractual obligation. It means that the
parties have dutifully carried out all their contractual obligations. The basic rule here is that the
parties must perform their obligations in exact accordance with the agreed terms of the contract.
The contract must be performed at the time and place agreed to. If no time was agreed, then it
must be performed within a reasonable time, and what is reasonable will obviously depend on
the circumstances of each case. When a specific time or date is mentioned, then it is said that
time is of essence in the contract, and completion in accordance with the time becomes a
condition going to the very foundation of the contract.
1.2.1 Conditional Performance

Condition: A contractual qualification, provision, or clause which creates, suspends, or
terminates the obligations of one or both parties to the contract, depending on the occurrence or
nonoccurrence of some event.

Condition Precedent: A condition that must be satisfied before a party’s
contractual obligation to perform becomes absolute (e.g., Bob promises to hire
Terry as a driver as soon as Terry gets his license).

Condition Subsequent: A condition the occurrence or nonoccurrence of which
will terminate a party’s absolute obligation to perform (e.g., Mary agrees to let
Sue stay in Mary’s spare room for as long as Sue remains unmarried).
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Discharge of building contract in Nigeria

Concurrent Conditions: Mutually dependent conditions that must occur or be
performed at the same time in order to give rise to any absolute obligation to
perform (e.g., Nikki offers to pay Tina $100 in exchange for Tina’s class ring).

Courts recognize and enforce both express and implied conditions. Express
Condition provided for by the parties agreement. Usually prefaced by the word if,
provided, after, or when. While implied-in-Fact Condition understood to be part
of the agreement but not found in the express language of the agreement. The
court infers them
from the promises (notice is an implied condition to correct
a defect under a warranty).
1.2.2 Contractual Performance

Discharge by Performance: A contract terminates when both parties perform or tender
performance of the acts they have promised.

Discharge Tender of Performance
Discharge can be accomplished by tender (an unconditional offer to perform by one who
is ready, willing, and able to do so). If performance has been tendered and the other party refuses
to perform, the party making the tender can sue for breach.

Types of Performance
1. Complete versus Substantial Performance
a. Complete Performance: - Express conditions fully occur in all aspects.
b. Substantial Performance: - Performance that does not vary greatly from the
performance promised in the contract. If one party fulfills the terms of the contract with
substantial performance, the other party is obligated to perform (but may obtain damages
for the deviations).
2. Performance to the Satisfaction of Another
a. Personal Satisfaction of One of the Parties: - When the subject matter of the contract is
personal, performance must actually satisfy the party (a condition precedent).
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Discharge of building contract in Nigeria
b. Satisfaction of a Reasonable Person: - Contracts involving mechanical fitness, utility,
or marketability need only be performed to the satisfaction of a reasonable person.
c. Satisfaction of a Third Party: - When the satisfaction of a third party is required, most
courts require the work to be satisfactory to a reasonable person

Time for Performance
If no time is stated in the contract, performance is due within a reasonable time.
1.3 Discharge by Agreement
Since a contract comes into being by agreement, the parties may if they wish discharge
their agreement by another agreement. If the contract is executory, each party releases the other
from performing. In that way each has given consideration for the other namely the release and
the second agreement discharges the first agreement. A contract may be discharged by an
agreement to that effect between the parties. This may be –
1. By waiver, cancellation, or rescission.
2. By a substituted agreement.
3. By accord and satisfaction

Waiver, Cancellation and Rescission: A contract may be discharged by an express
agreement that it shall no longer bind either party. This process is called a waiver, cancellation,
or rescission of the contract. A waiver is a relinquishment of a right under a contract and a
rescission is a complete unmaking of the contract and contemplates the restoration of the parties
to their original position as if the contract had not been made.
Cancellation is sometimes used in the sense of rescission, but more properly it signifies
the defacing of a written contract with intent to destroy its legal effect. A consideration is
necessary to support such an agreement, except:
(a) Where the agreement is under seal.
(b) A negotiable instrument may be discharged by its mere surrender with intent to
discharge it.
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Discharge of building contract in Nigeria
Waiver is to be distinguished from a rescission, in that it is a mere release of, or failure to
insist upon, a right; whereas a rescission destroys the entire contract and entitles each party to
recover any consideration given by him under it. Rights acquired by contract may be
relinquished or abandoned, either by agreement or by conduct indicating such a purpose. In the
absence of a consideration, a promise to forego the right to demand performance of a contract
would be nudum pactum and void. It has often been said that "a simple contract may, before
breach, be waived or discharged without a deed and without consideration"; but this is
inaccurate. A consideration, or a deed dispensing with the necessity for a consideration, is
always essential. Where the contract is wholly executory, a mere agreement between the parties,
that it shall no longer bind them, is valid, for the discharge of each by the other from his
liabilities under the contract is a sufficient consideration for the promise of the other to forego his
rights. If the agreement is not mutual tracts, that is, if it is a waiver of his rights by one party
only, there is no consideration, and the agreement is void. If a contract has been executed on one
side, an agreement that it shall no longer be binding, without more, is void for want of
consideration. To illustrate these distinctions:
If a person agrees to buy goods from another, or to perform services for him, and the
other agrees to pay therefore, the contract may be discharged by a simple agreement to that
effect, so long as the goods or services have not been delivered or performed, and the money has
not been paid. After performance on either side, however, a promise by the party so performing
not to require performance by the other would not be binding unless under seal or supported by a
consideration.

Substituted Agreement: Substituting, by agreement, a new contract for the old contract,
thereby terminating the parties’ rights and duties under the old contract. Notice that the parties to
a substitute agreement are the same as the parties to the original contract.

Novation: Substituting a new contract, replacing on or more of the original
parties for the old contract, thereby terminating the original parties’ rights and
duties under the old contract. Novation requires
(1)
(2)
(3)
(4)
A valid, prior agreement, for which
All parties agree to substitute a new contract;
Discharge of the prior obligation; and
A valid, new agreement.
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Discharge of building contract in Nigeria

Compromise or Settlement Agreement: Parties to a contract can execute a new
agreement with different terms. The new agreement can either expressly or
impliedly revoke or discharge the previous contracts obligations.

Accord and Satisfaction: To discharge by accord and satisfaction, the parties must agree
to accept performance that is different from the performance originally promised.



Accord: An accord is an executory contract to perform an act that will satisfy an
existing duty. An accord suspends, but does not discharge, the duty.
Satisfaction: Satisfaction is the performance of the accord, which discharges the
original contractual obligation.
If the Obligor Refuses to Perform: The obligee can sue on the original
obligation or seek a decree for specific performance on the accord.
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Discharge of building contract in Nigeria
1.4 Discharges by Impossibility or Frustration
In a limited number of circumstances, “frustrating” events may be regarded by the Courts
as affecting the contract in such a fundamental manner as to render further Performance of the
contract “impossible”. Subject matter did exist at the time of the Contract, but subsequently,
through no fault of either party.
If further fulfillment of the contract is brought to an abrupt end by some irresistible and
extraneous cause for which either party is responsible the contract terminates forthwith and the
parties are discharged from their obligations.
In other words frustration occurs when the law recognizes that without the fault of either
party, a contractual obligation has become impossible of being performed because the
circumstance in which performance is called for would render it radically different from that
which was undertaken by the contract.
Sometimes circumstances change so much after a contract is made that it is impossible to
carry it out. For instance, the subject matter of the contract may be destroyed, as where there is a
contract to buy a painting, but before it can be handed over, it is stolen or destroyed by fire. If
this happens without the fault of either party a court may find that the contract has automatically
ceased ('become frustrated'). In that case neither party will be bound. The court must be satisfied
that there is no provision in the contract that the contract should continue to bind even if such an
event should occur.
Frustration therefore is always brought about by an event which occurs subsequent to the
formation of the contract. Therefore frustration only discharges the parties from the moment of
the frustrating event and all the obligations which were due to be performed before the
frustrating event are completely discharged. Frustration could be due to the fact that the subject
matter of the contract has been destroyed before performance falls due or because an event has
failed to occur.
The Frustrated Contracts Act 1988 provides that in some circumstances, partial
frustration of a contract need not result in the failure of the whole contract. For example, when
the circumstances constituting frustration make it impossible to fulfill a particular part of the
contract, only that part is frustrated and there remains a part of the contract which can be fulfilled
and which continues to bind the parties. The Act does not apply to contracts to which the Crown
is a party nor to contracts entered into before the Act came into force in 1988. Also specifically
excluded are six other types of contract, including a contract for insurance and partnership
agreements.
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Discharge of building contract in Nigeria
1.4.1 Government Intervention or Supervening Illegality
If government rules and obligations or enactments prevent one party from fulfilling his
obligations the contract is frustrated. This is especially important in cases concerning imports
and exports. Also, where performance of a contract would amount to dealing with an enemy, the
contract is frustrated.
1.4.2 Effect of Frustration
Both parties are released from further obligations once the frustration event occurs. Any money
paid out can be recovered from the party to whom it was paid. Any money yet to be paid ceases
to be payable. This is the position in the former Eastern and Northern States of Nigeria. In Lagos,
former Western and Mid Western states the position is that
1. Any money paid out can be recovered from the party to whom it was paid and that person
need not be a party to the actual contract.
2. Any money to be paid ceases to be payable.
3. If the party to whom the money was paid to or to whom it was owed had incurred expenses
before the date of discharge in furtherance of the performance of the contract then, such expenses
can be paid for.
4. If one party has gained an advantage under the contract before the frustrating event for e.g. by
way of part-performance, then the court can at its own discretion order payment to be made by
the party under contract.
1.5 Discharge by Breach.
An unjustifiable failure to perform all or some part of a contractual duty constitutes a
breach of contract. It ensues when a party who has a duty of immediate performance fails to
perform, or when one party hinders or prevents the performance of the other party. A total,
major, material, or substantial breach of contract constitutes a failure to perform properly a
material part of the contract. A partial or minor breach of contract is merely a slight deviation
from the bargained-for performance. A breach may occur by anticipatory repudiation (This
occurs when one party either expressly or impliedly intimates or shows that he will not honour
his obligations), whereby the promisor, without justification and before committing a breach,
makes an affirmative statement to the promisee, indicating that he or she will not or cannot
perform the contractual duties.
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Discharge of building contract in Nigeria
The differences in the types of breach are significant in ascertaining the kinds of remedies and
damages available to the aggrieved party.
1.5.1 Remedies
Damages, reformation, rescission, restitution, and specific performance are the basic remedies
available for breach of contract. Damages signify a sum of money awarded as a compensation
for injury caused by a breach of contract. The type of breach governs the extent of the damages
to be awarded.
Failure to perform: The measure of damages in breach-of-contract cases is the sum that would
be necessary to recompense the injured party for the amount of losses incurred through breach of
contract. The injured party should be placed in the position that he or she would have occupied if
the contract had been performed, and they are entitled to receive the benefit of the bargain, the
net gain that would have accrued to them under the contract. The injured party is not, however,
to be put in a better position than he or she would have occupied had performance taken place.
Damages for anticipatory repudiation are ordinarily assessed as of the scheduled
performance dates that are fixed by the breached contract. The measure of damages for the
breach of an installment contract is determined at the time each installment is due. When the
parties have included a liquidated damage clause in a contract, it generally will be enforced.
Such clause is a prior agreement by the parties as to the measure of damages upon breach.
Additional damages may not be claimed.
Liquidated Damages: These are damages that are fixed at an agreed sum of money in the
contract. For instance, A covenants with B, not to carry on a particular business for a certain time
within a certain area and to pay “as and for liquidated damages” the sum of #1000 on breach of
covenant. Here, the parties have between themselves, assessed the amount of damage that will be
sustained by B if A commits a breach of covenant. The sum agreed upon is not always
recoverable, however, for if the amount is greatly in excess of the damage which is likely to
follow a breach, it will be regarded as a penalty which the Court will not enforce, and the injured
party will have to rely on his right to clam liquidated damages for the breach of contract. The
sum agreed upon will be considered as liquidated damages if it is a reasonable estimate of the
damage which are likely to be incurred having regard to the circumstances that existed at the date
when the contract was made. Where the amount agreed upon is less than the actual loss suffered,
that amount will be treated as liquidated damages and no larger amount can be recovered as
damages.
Partial performance: When the defendant has failed to complete performance of an agreement
according to its terms, the plaintiff may recover such damages as will compensate him or her to
the same extent as though the contract had been completely performed. The customary measure
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Discharge of building contract in Nigeria
of damages is the reasonable expense of completion. Completion refers to a fulfillment of the
same work, if possible, which does not involve unreasonable economic waste. The injured party
is not automatically entitled to recover the difference between the contract price and the amount
it would cost to have the work completed when a contract is breached after partial performance;
he or she will be entitled to recover that amount only if completion is actually accomplished at a
greater cost.
A provision in a building contract that allows the owner, in the event of a default by the
contractor, to complete the job and to deduct the expenses from the contract price does not
preclude the owner's recovering damages also where the contractor intentionally leaves the work
undone. A plaintiff may also recover the monetary value of materials that are lost through a
breach of contract. A plaintiff contractor who subsequently performs the work upon breach of a
contract will ordinarily recover the reasonable value of the labor and materials that he or she has
furnished, with the contract price used as a guideline. The award may not properly exceed the
benefit that the owner received in the properly completed work, and it will be reduced by the
amount of damages that the owner incurs as a result of the contractor's failure to complete
performance of the contractual obligation. If the value of the work performed exceeds the
contract price, the contractor will not receive the excess. Where a contract for the performance of
services exists with payment to be made in installments, and the obligation to pay for each
installment constitutes an independent promise, the individual who is entitled to payment may
recover only the installments that are due when the suit is brought.
Defective performance: Damages for defective performance of a contractual agreement are
measured by calculating the difference in value between what is actually tendered and what is
required as performance under the agreement. If the performance tendered is either of no value
or unsuitable for the purpose that the contract contemplated, the proper measure of damages is
the sum that is necessary to repair the defect. If a defect can be easily remedied through repairs,
the measure of damages is the price of the repairs performed.
Generally, the total contract price may not be recovered for substantial performance. If
the plaintiff furnished materials for items that were manufactured for the plaintiff in such a
manner as to be rendered worthless, the proper measure of damages ordinarily has been held to
be the discrepancy between the contract price and the market price of such items if they had been
manufactured according to the contract terms.
When a building or construction contract is defectively performed, the proper measure of
damages is the difference between the value of the property with the defective work, and its
value had there been strict compliance with the contract. Where the contractor deliberately
deviates from the contractual agreement, but there has been no substantial performance, damages
are determined by the actual expense of reconstructing the building according to the terms of the
contract.
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Discharge of building contract in Nigeria
Delay in performance: The loss precipitated by the wrongful delay of the performance of a
contract is calculated by fixing the rental or use of the property or interest as a result of the loss
incurred through increased material and labor expenses, as distinguished from what the value
would have been had the contract been performed on time.
Reformation: Reformation is an equitable remedy that is applied when the written agreement
does not correspond to the contract that was actually formed by the parties, as a result of fraud or
mutual mistake in drafting the original document. Quasi-contractual relief for the reasonable
value of services rendered is also available, although it applies only when there is no enforceable
contract.
Rescission: Rescission terminates the contract, and the parties are restored to the position of
never having entered into the contract in the first place.
Restitution: Restitution is a remedy that is designed to restore the injured party to the position
that they occupied prior to the formation of the contract.
Specific Performance: Specific performance is an equitable remedy by which a contracting
party is required to execute, as nearly as practicable, a promised performance when monetary
damages would be inadequate to compensate for the breach. A contract to sell land is specifically
enforceable because land is considered to be unique and not compensable by money. In addition,
property that has sentimental value, as well as antique, heirloom, or one-of-a-kind articles, are
viewed as unique, and therefore it would be impossible to estimate damages. A personal-service
contract or an employment contract, however, cannot be specifically enforced. If, however, the
contract proscribes a person from performing some act, breach of that negative covenant may be
specifically enforced.
1.5.2 When is breach enough to discharge contract?
Vernon case (2002) 58 O.R. (3d) 215 (C.A.) see Yates p.272. Vernon agreed with an auctioneer
that the latter would sell equipment currently at Vernon’s gravel pit. Parties agreed proceeds to
be deposited in a joint bank account and to be distributed between the parties in agreed
proportions. The auctioneer refused to deposit the first $100,000 even after ordered to do so by a
court. This amounted to breach of a condition of the contract. Auctioneer got nothing from the
$100,000 sale and was not entitled to sell the rest of the equipment when it was available.
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Discharge of building contract in Nigeria
1.6 Exemption or Exclusion Clauses.
Exemption clauses provide that one party will not be liable in certain situations; they
defeat or limit liability. Exemption clauses have traditionally had a bad press because they have
been misused, often to the detriment of consumers (i.e. you and me and the general public who
buy goods and services), and the courts have responded to this by repeatedly looking for ways to
cut them down. Nevertheless, you should keep in mind that they are not irredeemably evil or
objectionable. Exemption clauses can be used perfectly sensibly by the parties to allocate risk
between them. Sometimes it is more efficient for one party to take on a certain risk, perhaps
because he has insured against that risk or he wants the contract to be priced as low as possible,
and an exemption clause can allocate the risk in this particular way. To take a simple example,
if you have already purchased annual travel insurance, you may not want to pay the full price for
a holiday which includes a money-back guarantee if you are too ill to travel or if there are any
other disruptions to travel arrangements, and so you may prefer to pay a lower price and agree
that the holiday company can exclude any responsibility it might have in these eventualities.
Freedom of contract theory insists that the choice is the parties’ and not that of the courts. Parties
can bargain with or without exemption clauses but they must live with the consequences of their
bargain.
Examples include so-called “warranties” from automobile sellers that limit liability in the
event of defective cars. See also signs in parking lots, coat checks, dry cleaners limiting liability
for damage caused in the delivery of service. These are lawful and legally effective if notice is
given at the time the contract is created. Contra proferentem Strictly interpreted against the party
relying on the exemption clause. It protected against negligence or gross negligence. But
package was mis-delivered and documents falsified. It couldn’t be found. Plaintiff ordered a new
machine, and then the other turned up. Plaintiff successful as act was willful not negligent.
Also, cases where item was delivered late. Exemption clauses contained in contract but
item was never delivered. Notice must be given for exemption clauses to override implied terms
of contract regarding competence and damages etc. Failure to read such a clause is no excuse but
if exemption clauses is hidden in long document and is an unusual or unexpected clause, it must
be expressly brought to notice of the other party to be effective if it is challenged by the other
party.
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Discharge of building contract in Nigeria
1.6.1 The control of exemption clauses
So why are the courts so set against exemption clauses, apparently in defiance of the
parties’ freedom of contract? The answer is that the courts do not object to exemption clauses in
themselves, but they object to the abuse of exemption clauses. The whole ideology of freedom of
contract is based on the assumption that the parties have a free choice and, in an ideal world, a
consumer will always have a choice between companies who use exemption clauses and
companies who do not. In practice, you often find that many if not all the companies offering a
particular type of service use standard forms which contain exemption clauses and so there is no
real choice. Furthermore, these exemption clauses are often in such small print and so long and
boring that no-one (not even the conscientious law student) ever reads them. In these
circumstances, choice is just an illusion; if you want the goods or service on offer then you have
to accept the exemption clause whether you are conscious of it or not. Even if there is some
difference between the terms on offer from different suppliers, the chances are that you won’t
have enough time or patience to discover which provider offers the best terms. Parties who use
exemption clauses are often in strong bargaining positions and can use standard form contracts to
surreptitiously impose extremely wide and unreasonable exclusions of liability, safe in the
knowledge that the other party will not even read these clauses, let alone object to them. It is this
type of behaviour, this abuse of the parties’ freedom to contract, that the courts are concerned to
prevent.
The most obvious defence against such abuse would be to declare unreasonable
exemption clauses invalid. Although the primary weapon of declaring unreasonable exemption
clauses invalid is unavailable at common law, the courts have used two other hurdles,
incorporation and interpretation, which they developed in order to bring down objectionable
attempts to exclude liability. If the courts can rule that an exemption clause has not been
incorporated into a contract, or interpret it in such a way that it does not cover the liability in
dispute, then this can be almost as good as finding the clause to be invalid. The major problems
with these two common law controls are the danger that the courts will distort the normal rules
of incorporation and interpretation in order to indirectly control unreasonable exemption clauses
And the converse problem that sometimes these devices are simply ineffective to counter a very
obvious and clearly worded but unreasonable clause. Given the statutory power now available to
strike down unreasonable clauses, neither of these problems is quite so acute as once was the
case and the rules of incorporation and interpretation can be applied today in a somewhat less
pressurized environment.
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Control of
Exemption Clause
Incorporation
Is the exclusion clause
validity incorporated into
the contract?
Interpretation
Validity
Does the exclusion
clause cover the
liability sought to be
excluded?
Is the exclusion
clause so
unreasonable that it
is invalid?
Danger that these common
law rules will be subverted
to compensate for the
court’s lack of power to
declare an exclusion
clause invalid or that these
rules will simply be
ineffective.
Courts
House of Lords
said courts have
no power to
declare an
exemption
clause invalid.
Diagram 1: Control of exemption clauses
17
Parliament
Power provided
in UCTA 1977
and Unfair
Terms in
Consumer
Contracts Regs.
Discharge of building contract in Nigeria
1.6.2 Incorporation
1.6.2.1
Signed Documents
An exemption clause, like any other term, will be incorporated into a contract if it is
contained in a signed document. A person, who appends his signature to a document, in this case
a contract, is presumed to have read it and is therefore bound by its contents. It is no defence to
say that one did not read it or that it was not understood or that the print was too small. The party
signing is equally liable if he signed a document in confirmation by reference to another
document containing the exemption clause. As in L’Estrange v Graucob (1934) where the
purchaser of a vending machine was bound by a very wide exemption clause contained in the
small print on the order form which she had signed. Scrutton LJ said: ‘When a document
containing contractual terms is signed, then, in the absence of fraud, or, I will add,
misrepresentation, the party signing it is bound, and it is wholly immaterial whether he has read
the document or not.’ The basis for this rule lies in the objective approach to intention. If a party
has signed a document then it is reasonable to conclude that he agrees to all the terms in that
document. The party may not have even read the terms but the important point is that his
signature makes it appear as though he has.
The objective approach will not apply when one party negligently causes the other party
to have a different subjective intention. The rule in L’Estrange does not therefore apply, as was
signaled by Scrutton LJ, when the signature is obtained by misrepresentation (i.e. when one party
causes the other to think that the document he is signing contains terms different to those it
contains in reality). This is nicely illustrated by Curtis v Chemical Cleaning Co. (1951) where a
woman took a wedding dress to the Chemical Cleaning Co. to be dry-cleaned. When she asked
why she had to sign a receipt which in fact contained a clause excluding liability ‘for any
damage howsoever caused’ she was told unwittingly by the assistant that it was because the
cleaning company did not accept liability for any damage to the beads or sequins on her dress.
This was quite untrue and a misrepresentation (albeit one made innocently) because the clause
clearly excluded liability for all damage. The cleaning company stained the wedding dress but
they were prevented from relying on the exemption clause to exclude their liability since, in the
words of Denning LJ, ‘a false impression was created’. You might want to consider what the
position would have been had the beads or sequins been damaged rather than the dress; would
the clause, as represented, covering beads and sequins, have been incorporated into the contract?
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1.6.2.2
Notice
It is obvious that not every contractual document will be signed and the law recognizes
this by allowing terms to be incorporated by notice. This might be as simple as showing the other
party a written set of terms but not requiring him to sign them, although the cases below show
that the facts can become much more complicated. In Parker v South East Railway Co. (1877)
Mr. Parker paid to leave his bag in the Railway Company’s cloakroom, but unfortunately it was
lost or stolen. Mellish LJ was faced with the question of whether the printed terms on the back of
a ticket given to Mr. Parker, one of which excluded liability for packages exceeding £10, had
been incorporated into the contract between Mr. Parker and the Railway Company. He thought
that first of all Mr. Parker had to see or know that there was writing on the ticket and if he knew
there was writing and knew or believed that the writing contained conditions (terms), then he
was bound by them. Provided he knew there was writing on the ticket, even if he did not know or
believe that the writing contained conditions, he would still be bound ‘if the delivering of the
ticket to him in such a manner that he could see was writing upon it, was, in the opinion of the
jury, reasonable notice that the writing contained conditions.’ The case is the foundation of the
courts’ general approach to the issue of incorporation by notice, i.e. that what matters is not
whether the claimant has become aware of the detail of the exemption clause (although of course
if there is full awareness the clause will be incorporated) but whether the person seeking to rely
on the clause has taken reasonable
steps to bring it to his attention. What is reasonable notice will obviously change from case to
case depending upon the actual circumstances, but some general points can be made.
Timing of notice
First, and rather obviously, notice of terms must be given before or at the time the contract is
made. In Olley v Marlborough Court Ltd (1949) a contract was formed at the hotel reception
desk and the hotel owner could not rely on an exemption clause that was only notified to the
guest when she entered the bedroom and saw a notice on the wall. When faced with a question of
notification of terms the most important step is to establish when the contract was formed. The
courts do not seem to worry about split seconds so that where an exemption clause is notified on
the back of a ticket, the notice will be sufficiently contemporaneous with the contract even
though technically the contract (the offer and acceptance) will have taken place a split second
before the ticket was handed over. Where the contract is formed at a staffed ticket booth it is
conceivable that a passenger who objects to the terms notified on the back of his rail ticket can
return the ticket and demand his money back on the basis that no agreement has been reached.
Automatic ticket machines present a different problem and cannot be dealt with in this way. In
Thornton v Shoe Lane Parking (1971), in order to get into the defendant’s multistory car park a
driver had to drive up a ramp, pay his money and take a ticket from a machine. Lord Denning
MR said that the contract was concluded at this point and any notice of terms on the ticket came
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too late. The reason behind this strict approach to timing is that, unlike the situation where one is
dealing with another person rather than a machine, the driver ‘may protest to the machine, even
swear at it; but it will remain unmoved. He is committed beyond recall’.
Control of
Exclusion Clauses
Validity
Interpretation
Incorporation
(UCTA 1977)
By Notice:
By Signature:
All terms in a signed
document are incorporated
(L’Estrange), unless;
Terms can be incorporated
by giving reasonable notice
to the other party (Parker);





fraud
misrepresentation
(Curtis v Chemical
Cleaning)
mistake? (see Spencer)
non est factum (Gallie
v lee)



must be before or at
time of contracting
(Olley, Thornton)
must be in a document
in which it is reasonable
to expect to find terms
(Chapelton)
it is sufficient to give
notice of the term can be
found (Thompson)
more explicit notice is
necessary for ‘unusual
terms’
Really striking at the
validity of
unreasonable terms?


when the term is
unreasonable (Lord
Denning Thornton)
when the term is of an
unusual type (Hob
house LJ in AGE(UK)
Diagram 2: Incorporation of exclusion clauses by signature and notice as a control
mechanism.
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1.6.3
Interpretation
If an exemption clause has been incorporated into the contract then the courts’ next line
of defence is through interpretation. The courts have to work out what the parties intended their
words to mean, always bearing in mind that the objective approach focuses on what the parties
appear to have intended rather than what they actually (subjectively) intended. Even when the
parties’ subjective intentions are removed from the picture, there is plenty of scope for ambiguity
and argument over the meaning of the terms. In short, even the reasonable person encounters
difficulties interpreting the terms of the contract. Lord Hoffmann summarized the principles
judges should follow when interpreting terms (not just exemption clauses) in ICS v West
Bromwich Building Society (1998). He emphasized that judges should take a ‘purposive’
approach that looks for the parties’ objective intentions rather than a ‘literal’ approach that looks
for a dictionary definition for the words used.
1.6.4 Unsigned Documents
Where the document is not signed, a different consideration would apply. In cases in
which the contract is say a ticket or other unsigned documents, it is necessary to prove that an
alleged party was aware or ought to have been aware of its terms and conditions. In other words,
where the document is unsigned the question to be answered is whether or not the exclusionary
terms are part of the contract. In order to decide this point, one has to determine whether
sufficient notice was given to the other party regarding the exclusionary term or whether from
the course of dealing he might to have know of the terms. Even where the court decides that the
exemption clause has been brought to the notice of the contracting parties, it may still nullify its
effect when it comes to interpreting such a clause. There are 2 methods of doing this; by
applying the contract proferentum rule or the fundamental obligation theory.
1.6.4.1
Contract proferentum rule
The Court interprets exclusion clauses restrictively against the person relying on it. For
example, if he limits his liability for breach of a condition, the Courts will hold that such a
limitation does not include a warranty and would thus hold the party liable for breach of
warranty. The courts also do not easily accept the exclusion of liability for negligent acts unless
the wordings clearly show that such was the intention. The party claiming protection of the
clause must prove that it covers the situation about which the plaintiff is complaining. If there
were any clauses which are ambiguous, the Court would interpret them against the party who
inserted them.
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The person responsible for including the clause in the contract has the opportunity to
make the wording clear and so should be the one to lose out if there is any ambiguity. For
example, a term of an insurance contract in Houghton v Trafalgar Insurance Co. Ltd (1954)
excluded liability if the car was carrying an excess ‘load’ but this was interpreted as not applying
to the situation where the car was carrying too many passengers, ‘load’ was interpreted as
restricted to baggage and not passengers. In Andrews Bros (Bournemouth) Ltd v Singer & Co.
(1934) the contract for the sale of cars provided that ‘all conditions, warranties and liabilities
implied by statute, common law or otherwise are excluded’ but this was ineffective to exclude
liability for breach of an express term. Lord Diplock warned against taking the contra
proferentem approach too far in Photo Productions v Securicor (1980): ‘in commercial contracts
negotiated between businessmen capable of looking after their own interests . . . it is, in my view,
wrong to place a strained construction on words in an exemption clause which are clear and
fairly susceptible of one meaning only.’ Even when the contract involves a consumer it is
obvious that a very clearly worded exemption clause will stand up to the courts’ strict approach –
see the exemption clause in L’Estrange v Graucob for an unambiguous example which went one
step further than that in Andrews v Singer by referring to ‘any express or implied condition,
statement or warranty, statutory or otherwise . . .’ (emphasis added).
1.6.4.2
The Fundamental Obligation Theory.
The idea is that in every contract there is some central theme or basic obligation. If a
party tries to exclude himself from performing what amounts to the core or the very existence or
essence of the contract then he is attempting to avoid the fundamental duty. The courts will
generally not allow him to do so. In a case the plaintiff decided to take a second hand car on hire
purchase. He signed a document which contained the following exclusion clause “no condition
or warranty that the vehicle is roadworthy or as to its age, condition or fitness for any purpose is
given by the owner or implied therein”. On the day of delivery, the car would not move and
many parts had even disappeared. The Court held that they had contracted to sell a car and at the
same time have tried to exclude themselves should it turn out not to be a car. This could not be
so and they were therefore held liable.
A theory of obligation can be centered around one foundational assumption: that there
exists a moral imperative to aid the structurally dispossessed and functionally abused. Other
theories of obligation might emphasize different, more utilitarian approaches. We do not think
that ours entertains a highly controversial assumption. Indeed, the moral imperative to assist
others has been codified in international human rights laws which have been widely ratified and
have garnered global (even if often rhetorical) attention and support (Donnelly 2006). In turn, a
theory of obligation structures our response to the moral imperative to give aid. At its simplest,
obligation is found in basic human interactions and expectations. Friendship entails obligation,
often accompanied by feelings of gratitude. Gratitude, in turn, is expressed for acts of kindness
(Epstein 2006: 69). Such understandings provide us with a framework within which we can
operate ethically and effectively not only in everyday interactions but to benefit the dispossessed
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and abused, and to guarantee their human rights. Thus our theory of obligation has two major
components: a moral/ethical element which informs decisions as to which issues are appropriate
for humanitarianism and which actions are morally permissible in pursuing them; and a
pragmatic element which guides us in evaluating the most effective use of available resources.
The overlap between the two components, the morally possible and the materially possible,
consists of those actions that we are obligated, as representatives of humankind, to pursue.
The Morally Possible
The moral component of a theory of obligation can be further broken down into four
constituent parts: burden sharing, personal responsibility and institutional accountability,
sympathy and compassion, and non-neutrality. Each of these concepts will be discussed in turn.
If we admit to a moral obligation to aid the dispossessed and disadvantaged, we must
concurrently admit to the existence of a burden that we carry. In this sense, a burden is the
positive load that stimulates response to people in need. It is our responsibility to act, to involve
ourselves with people who are in need of our aid and care. Stated differently, we only have an
option regarding which type of assistance to offer, not whether we will offer assistance at all.
Burden sharing implies that the burdens should be borne equitably among those who
share in the moral obligation to give aid. It is not that each person should shoulder as much of the
burden as their emotional, physical, and material abilities allow, but that the amount that each
individual bears should be proportional to their own resources and the actual needs to be
addressed. The obligation to assist is most appropriately actualized on an individual scale. A
theory of obligation is fundamentally concerned with the actions and needs of individuals, both
providers and beneficiaries. The second moral principle of this theory of obligation is personal
responsibility: the idea that responsibility for the burden devolves onto individuals.
The dictates of effective data collection and comprehension require that we sometimes
look at groups of individuals, at what might be termed “aggregate responsibility”. However, this
should not shield us from the sometimes extraordinary efforts of individuals. In contrast to the
seeming disinterest of the United States as a whole, certain American individuals in the United
States come closer to the ideal of equitable burden sharing. Bill and Melinda Gates are examples
(MSNBC.com 2005). We speculate that Americans, in particular, may be more willing to engage
in humanitarian giving in a non-governmental context. For example, although subsequent
donations dropped, the Red Cross received donations in excess of $1.3 billion in the wake of
Hurricane Katrina.
The organizational counterpart to personal responsibility is institutional accountability. As aid
organizations are the preferred structure for providing aid on the ground, they must be held
accountable for policies and their effects, intended or not. Accountability relates to the actual
attainment of pre-defined institutional goals. The question of who institutions are accountable to
is currently a subject that is much talked about (Kristof 2006). It is our contention that aid
organizations, across the board, are primarily accountable to aid recipients, to the people on
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whose lives they have the greatest impact and for whom their services are intended. This is also,
in part, due to the “obligation” inherent in our theory of obligation: if we acknowledge a moral
obligation to aid the disadvantaged, then beneficiaries become the “ultimate arbiters” (Smillie
and Minear 2004: 18-21). The “obligation” explicit in our theory is clearly an obligation to aid
recipients, to assist those disproportionately disadvantaged.
Our notion of obligation is not an abstract or distant concept. Instead, it is grounded in the
actual experience and expression of sympathy and compassion. (For those service providers
sharing experiences to those being served, empathy also is essential.) Both of these sentiments
require us to become engaged on a personal and emotional level with those whom we are aiding.
Sympathy is the emotive ability to appreciate the negative experience of another, usually despite
the lack of full, explicit communication of circumstances, resulting in a (hopefully deep)
awareness of that suffering. Compassion is closely related; it can be defined as a profound
awareness and understanding of the suffering of others coupled with a real desire to alleviate that
suffering. Returning to the example of hospice care, we can see how sympathy and compassion
are crucial to humanitarian work. Suffering is ubiquitous in hospice situations. The very
pervasiveness of suffering can overwhelm hospice workers or inure them to the pan-human
impact that suffering has. In this context, sympathy and compassion structure our response and
ensure a humane connection between caregivers and recipients. The second author, who has
worked extensively with the hospice movement, stresses that: “…compassion entails the ability
to genuinely assist others, but is far more than simply being helpful…. [It] centers on offering
care…. It focuses on the provision of psychosocial support to a suffering person…. Most
importantly, a compassionate person is one who actively listens to the other person, without
treating him or her as ‘the other.’ In listening, choices are considered” (Van Arsdale 2006: 9).
This personal type of connection by aid workers in relation to aid recipients implies nonneutrality, the final moral principle that orients our theory of obligation. The ability of humans to
maintain an impartial objectivity is very much in doubt in any case. In the context of a
sympathetic response to human suffering it is also inappropriate, as Prendergast (1996) has
repeatedly stressed based on his work in Africa. It is our human capability for subjective
relationships that allows us to identify with suffering, to approach the concept of
humanitarianism not as a set of abstract principles, but as part of an obligation to every
struggling individual. It is because we cannot remain neutral to the suffering of others that we are
compelled to actively engage in humanitarian action. At first glance, it appears that accepting
non-neutrality might hinder the equitable distribution of aid. This is not the case. Effective
humanitarian organizations, such as Doctors without Borders, must acknowledge the nonneutral, subjective nature of humans in order to develop the capacity to see aid’s impact and
channel it in an appropriate manner. Political circumstances must be evaluated and constraints to
service discussed. In order to accomplish this non-neutrality, sympathy and compassion must be
accompanied by a strong commitment to fairness, a concept described in depth above.
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The Materially Possible
In the same way that we have broken down the moral component of the theory of obligation, we
can also break down the material component. There are three constituent parts: pragmatism, felt
needs, and the networks of service providers and associated infrastructure. Each is described
below.
When evaluating what actions are materially possible, it is of primary importance to
recognize the need for pragmatism: the acknowledgment of real-world conditions that constrain
actions and impact the results of those actions, coupled with the acceptance of the idea that the
value of ideas and actions is found in their real-world consequences. As it is obviously physically
impossible to resolve every humanitarian issue at once, setting realistic, achievable goals that can
be met “on the ground” is vital (Smillie and Minear 2004: 225-229). Sustainability is key in this
respect: to be pragmatic, one must chose initiatives that are able to be supported and sustained
over time. Sustainability depends on access to reliable resources, the presence of staff and/or
volunteers who are sufficiently committed to the mission, and an “indigenous connective-ness”
to the mission in order to address felt needs. Thus workable solutions are context-based. Because
an emphasis on pragmatic humanitarianism implies a need to acknowledge the inability to solve
all of the world’s problems at once, there must be some mechanism determining where to apply
scarce resources, where to “triage” our activity. Again, the ethical principle of obligation to assist
can structure our response. In assessing the environment where assistance is to be delivered we
look for the areas where the available resources can be of most assistance. This is what our
colleagues working in Bosnia currently are doing. Here the comparison with the medical concept
of triage is quite apt: deal with the worst of the fixable problems first. But how do we determine
which are the “most significant problems”? The assessment of the felt needs of intended
beneficiaries is a key component of a theory of obligation. Central to this is the assumption that
the needs and interests of the beneficiaries are of greater importance than those of the
humanitarian organization, its board, its staff, or its donors. Therefore, recognizing and
incorporating the voices of intended recipients through an assessment of their felt needs is
fundamental to the theory. “Felt needs” are those needs that represent beneficiaries’ worldviews;
felt needs are expressed in unfiltered fashion and may not conform to service providers’ visions.
They often are not evident to a detached observer.
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1.6.4.3
Contracts and Third Parties
The basic rule of contract is that a person who is not a party to a contract cannot derive a benefit
or suffer any liability from it nor can he benefit from an exemption clause howsoever widely
worded. This general rule is called Privity of Contract. Thus, a contract cannot be enforced by or
against a stranger to that contract even if the contract is under seal
Third-Party Beneficiaries
There are only two principal parties, the offeror and the offeree, to an ordinary contract. The
terms of the contract bind one or both parties to render performance to the other in consideration
of receiving, or having received, the other's performance. Contracts sometimes specify that the
benefits accruing to one party will be conferred upon a third party. The effect of a third-party
contract is to provide, to a party who has not assented to it, a legal right to enforce the contract.
A creditor beneficiary is a nonparty to a contract who receives the benefit when a
promise is made to satisfy a legal duty. For example, suppose that a debtor owed a creditor $500.
The debtor lends $500 to a third person, who promises to use the money to pay the debtor's debt.
The third person is the promisor, who makes the promise to be enforced. The debtor is the
promisee, to whom the promise is made. The contract is between the debtor and the third person,
the promisor, and the consideration for the promise is the $500 loan that the promisor received
from the debtor. The creditor is the third-party beneficiary. If the promisor refuses to pay the
creditor $500, then the creditor may sue the promisor and prevail. Although the creditor is not a
party to their contract, both the debtor and the promisor intend that the creditor should be the
beneficiary of the contract and have enforceable rights against the promisor, since he or she is to
pay the creditor. The debtor or the creditor may sue to enforce the promisor's promise to pay.
The creditor's right to enforce the contract between the debtor and the promisor is effective only
when he or she learns of, and assents to, the contract. The creditor may also sue the debtor for the
$500, as the debtor had a legal duty to pay this loan. The debtor then may sue the promisor for
breach of contract for refusing to pay the creditor.
A donee beneficiary of the contract is a non-party who benefits from a promise that is
made for the purpose of making a gift to him or her. A donor wishes to give a donee $200 as an
anniversary present. The donor plans to sell a television set for $200 to a purchaser, who
promises to pay the donee the $200 directly. The donee is a donee beneficiary of the purchaser's
promise to pay the money and may enforce this claim against the purchaser. The donee has no
claim against the donor, the promisee, as the donor has no legal duty to the donee but is merely
giving the donee a gift. However, the donor will be able to sue the purchaser for refusal to pay
the donee, because it would be a breach of the terms of their contract of sale.
The difference between a creditor beneficiary and a donee beneficiary becomes
significant when the parties to a contract attempt to alter the rights of the third-party beneficiary.
The promisor and the promisee have no right or power to alter the accrued rights of the donee
beneficiary without consent unless this power was expressly reserved in the contract, regardless
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of whether the donee knows about the contract. A donee beneficiary's rights become effective
when the contract is made for his or her benefit, regardless of whether he or she knows about the
contract. In contrast, a creditor beneficiary's rights vest only when the creditor beneficiary learns
of, and assents to, the contract.
1.7
Assignment (law)
An assignment (Latin cessio) is a term used with similar meanings in the law of contracts
and in the law of real estate. In both instances, it encompasses the transfer of rights held by one
party—the assignor—to another party—the assignee. The legal nature of the assignment
determines some additional rights and liabilities that accompany the act.
A)
Continuing Liability of Assignor
Assignor remains liable unless there is an agreement to the contrary. An agreement must
manifest intent to transfer rights, it may not necessarily be in writing, words will do, and the
rights assigned must be certain. The effect of a valid assignment is to extinguish privity between
the assignor and the obligor and create privity between the obligor and the assignee.
B)
Assignment of contract rights
Assignment of rights under a contract is the complete transfer of the rights to receive the
benefits accruing to one of the parties to that contract. For example, if party A contracts with
Party B to sell his car to him for $10, party A can later assign the benefits of the contract - the
right to be paid $10 - to party C. In this scenario, party A is the obligee/assignor, party B is an
obligor, and party C is the assignee. Such an assignment may be donative (essentially given as a
gift), or it may be contractually exchanged for consideration. It is important to note, however,
that party C is not a third party beneficiary, because the contract itself was not made for the
purpose of benefitting party C. However an Assignment only transfers the rights/benefits to a
new owner. The obligations remain with the previous owner. Compare Novation.
C)
When assignment will be permitted
The common law favors the freedom of assignment, so an assignment will generally be
permitted unless there is an express prohibition against assignment in the contract. Where
assignment is thus permitted, the assignor need not consult the other party to the contract. An
assignment cannot have any effect on the duties of the other party to the contract, nor can it
reduce the possibility of the other party receiving full performance of the same quality. Certain
kinds of performance, therefore, cannot be assigned, because they create a unique relationship
between the parties to the contract. For example, if party A contracts to hire an attorney to
represent her in a civil case for a fee of $1000, she cannot then assign her contractual right to
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legal representation to another party. Note however, that party A can assign her right to sue
under the same claim she contracted with the attorney to pursue.
D)
Requirements for an effective assignment
For assignment to be effective, it must occur in the present. No specific language is
required to make such an assignment, but the assignor must make some clear statement of intent
to assign clearly identified contractual rights to the assignee. A promise to assign in the future
has no legal effect. Although this prevents a party from assigning the benefits of a contract that
has not yet been made, a court of equity may enforce such an assignment where an established
economic relationship between the assignor and the assignee raised an expectation that the
assignee would indeed form the appropriate contract in the future.
A contract may contain a non-assignment clause, which prohibits the assignment of specific
rights, or of the entire contract, to another. However, such a clause does not necessarily destroy
the power of either party to make an assignment. Instead, it merely gives the other party the
ability to sue for breach of contract if such an assignment is made. However, an assignment of a
contract containing such a clause will be ineffective if the assignee knows of the non-assignment
clause, or if the non-assignment clause specifies that "all assignments are void".
Two other techniques to prevent the assignment of contracts are rescission clauses or clauses
creating a condition subsequent. The former would give the other party to the contract the power
to rescind the contract if an assignment is made; the latter would rescind the contract
automatically in such circumstances.
E)
Requirement of a writing
There are certain situations in which the assignment must be in writing.
Assignment of wages
Assignment of any interest in real property
Assignment of choses of action worth over $5,000
Assignment as collateral for a loan or debt
For more information about contractual writing requirements see Statute of frauds.
F)
Novation
Novation replaces the new party with the original one. For a valid novation, (i) all parties
must assent to novation, (ii) there must be a previously valid contract, (iii) the duties provided for
in the contract be extinguished immediately, and (iv) a new, enforceable contract need be
created.
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Revocability
G)
Assignments made for consideration are irrevocable, meaning that the assignor
permanently gives up the legal right to take back the assignment once it has been made. Donative
assignments, on the other hand, are generally revocable, either by the assignor giving notice to
the assignee, taking performance directly from the obligor, or making a subsequent assignment
of the same right to another. There are some exceptions to the revocability of a donative
assignment:
H)

The assignment cannot be revoked if the obligor has already performed

The assignment cannot be revoked if the assignee has received a token chose (chose
being derived from the French word for "thing", as in a chore of action) - a physical
object that signifies a right to collect, such as a stock certificate or the passbook to a
savings account.

The assignment cannot be revoked if the assignor has set forth in writing the assignment
of a simple chose - a contract right embodied in any form of token.

Estoppel can prevent the revocation of a donative assignment if the assignee changed
their position in reliance on the assignment.

Finally, the death or declaration of bankruptcy by the assignor will automatically revoke
the assignment by operation of law.
Breach and defenses
A cause of action for breach on the part of the obligor lie with the assignee, who will hold
the exclusive right to commence a cause of action for any failure to perform or defective
performance. At this stage, because the assignee "stands in the shoes" of the assignor, the obligor
can raise any defense to the contract that the obligor could have raised against the assignor.
Furthermore, the obligor can raise against the assignee counterclaims and setoffs that the obligor
had against the assignor. For example, suppose that A makes a contract to paint B's house in
exchange for $500. A then assigns the right to receive the $500 to C, to pay off a debt owed to C.
However, A does such a careless job painting the house that B has to pay another painter $400 to
correct A's work. If C sues B to collect the debt, B can raise his counterclaim for the expenses
caused by the poor paint job, and can reduce the amount owed to C by that $400, leaving only
$100 to be collected. When the assignor makes the assignment, he makes with it an implied
warranty that the right to assign was not subject to defenses. If the contract had a provision that
made the assignment ineffective, the assignee could sue the assignor for breach of this implied
warranty. Similarly, the assignee could also sue under this theory if the assignor wrongfully
revoked the assignment.
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I)
Successive assignments
Occasionally, an unscrupulous assignor will assign the exact same rights to multiple
parties (usually for some consideration). In that case, the rights of the assignee depend on the
revocability of the assignment, and on the timing of the assignments relative to certain other
actions. In a quirk left over from the common law, if the assignment was donative, the last
assignee is the true owner of the rights.
J)
Compare: Delegation
A parallel concept to assignment is delegation, which occurs when one party transfers his
duties or liabilities under a contract to another. A delegation and an assignment can be
accomplished at the same time, although a non-assignment clause also bars delegation.
K)
Assignment of property rights
Real property rights can be assigned just as any other contractual right. However, special
duties and liabilities attach to transfers of the right to possess property. With an assignment, the
assignor transfers the complete remainder of the interest to the assignee. The assignor must not
retain any sort of reversionary interest in the right to possess. The assignee's interest must abut
the interest of the next person to have the right to possession. If any time or interest is reserved
by a tenant assignor, than the act is not an assignment, but instead is a sublease.
The liability of the assignee depends upon the contract formed when the assignment takes
place. However, in general, the assignee has privity of estate with a lessor. With privity of estate
comes the duty on the part of the assignee to perform certain obligations under covenant, e.g. pay
rent. Similarly, the lessor retains the obligations to perform on covenants to maintain or repair
the land. If the assignor agrees to continue paying rent to the lessor and subsequently defaults,
the lessor can sue both the assignor under the original contract signed with the lessor as well as
the assignee because by taking possession of the property interest, the assignee has obliged
himself to perform duties under covenant such as the payment of rent.
Unlike a Novation where consent of both the lessor and lesse is required for the third party to
assume all obligations and liabilities of the original lessee, an assignment does not always need
the consent of all parties. If the contract terms state specifically that the lessor's consent is not
needed to assign the contract, then the lesee can assign the contract to whomever the lesee wants
to. Absent language to the contrary, a tenant may assign their rights to an assignee without the
landlord's consent. In the majority of jurisdictions, when there is a clause that the landlord may
withhold consent to an assignment, the general rule is that the landlord may not withhold consent
unreasonably unless there is a provision that states specifically that the Landlord may withhold
consent at Landlord's sole discretion.
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Discharge of building contract in Nigeria
L)
Assignment of partnership rights
A person can also assign their rights to receive the benefits owed to a partner in a
partnership. However, the assignee cannot thereby gain any of the assignor's rights with respect
to the operation of the partnership. The assignee may not vote on partnership matters, inspect the
partnership books, or take possession of partnership property; rather, the assignee can only be
given the right to collect distributions of income, unless the remaining partners consent to the
assignment of a new general partner with operational, management, and financial interests. If the
partnership is dissolved, the assignee can also claim the assignor's share of any distribution
accompanying the dissolution.
M)
Assignment of intellectual property rights
Ownership of intellectual property, including patents, copyrights, and trademarks may be
assigned, but special conditions attach to the assignment of patents and trademarks. In the United
States, assignment of a patent is governed by statute, 35 U.S.C. § 261. Assignment of an interest
occurs only by an "instrument in writing". The statute also permits recording an assignment with
the United States Patent and Trademark Office, but recording is not required. With respect to a
trademark, the owner of the mark may not transfer ownership of the mark without transferring
the goodwill associated with the mark. Companies sometimes request from employees that they
assign all intellectual property they create while under the employment of the company. This is
typically done within an Employment Agreement, but is sometimes done through a specific
agreement called Proprietary Information and Inventions Agreement (PIIA).
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Discharge of building contract in Nigeria
1.8
Discharge by operation of law
This may occur in certain cases:
1. Merger: A simple contract is swallowed up, or merged into a subsequent deed covering the
same subject matter, and in the deed. Similarly a judgement, which is a contract of record,
merges the contract Debt on which the action was brought, so that all future actions are based On
the judgement.
2. Material alteration: An alteration of a material part of a deed or written Contract made by one
party intentionally and without the consent of the other party, will discharge the contract.
3. Death: Death will discharge a contract for personal services. Other contractual rights and
liabilities survives for the benefit, or otherwise, of the estate.
4. Bankruptcy: A right of action or breach of contract possessed by a debtor, which relates to his
property and which if brought will increase his assets, will pass to his trustee in bankruptcy, e.g.
A contract with a third party to deliver goods or to pay money to the debtor. The right to sue for
injury to the debtor’s character or reputation does not pass to the trustee, even though it arises
from a breach of contract.
In Wilson v. united counties Bank (1920), a
Businessman left his business affairs in the hands of the bank whilst he went to serve in the war
of 1914-18. The bank mismanaged his affairs, and he was eventually adjudicated bank
mismanaged his affairs, and he was eventually adjudicated bankrupt. The trader and his trustee
brought this action again the bank for breach of their contraction duty. Damages of E45, 000
were awarded for loss of estate, and of E7500 for the injury caused to the trader’s credit and
business reputation. With regard to the damages the Count held that the E45, 000 belonged to the
trustee for the benefit of creditors, and the E7500 went to the trader personally.
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Discharge of building contract in Nigeria
REFERENCES

Adams and Brownsword, ‘The Unfair Contract Terms Act: a decade of discretion’ (1988)
104 LQR 94.

Building Law handout by Pro. O.O Ogunsote

Bright, ‘Winning the battle against unfair contract terms’ (2000) 20 LS 331.

Chen-Wishart, Contract Law (Oxford University Press, 2005) Ch.12.

Collins, ‘Good faith in European contract law’ (1994) 14 OJLS 229.

Ch. 16: Contracts: Performance and Discharge-west’s Business Law (9th edition.)

http://law.jrank.org/pages/5693/Contracts-Third-Party

http://law.jrank.org/pages/5695/Contracts-Discharge-Contracts.html#ixzz0UV53W4Ta

http://law.jrank.org/pages/56

"Handbook of the Law of Contracts", by Wm. L. Clark, Jr.

Law Commission Report No. 292, ‘Unfair terms in contracts’, February 2005.

MacDonald, ‘Unifying unfair terms legislation’ (2004) 67 MLR 69.

McKendrick, Contract Law: Text, Cases and Materials (Oxford University Press, 2005)
Chs 9, 13 and 14.

O’Sullivan and Hilliard, The Law of Contract, 2nd edn (Oxford University Press, 2006)
Ch.9.
33