TABLE OF CONTENT
CHAPTER ONE..................................................................................................................2
1.0
Introduction..................................................................................................................2
1.1 Essentials of Building Contract......................................................................2
1.2 Parties to Building Contract..........................................................................2
1.3 Building Contract Documents.........................................................................3
CHAPTER TWO................................................................................................................5
2.0
Types of Building Contracts in Nigeria...............................................................5
CHAPTER THREE...........................................................................................................7
3.0
Mistakes and Misrepresentation of Building Contracts in Nigeria...........................7
3.1 Introduction......................................................................................................7
3.2 Mistakes in Building Contracts in Nigeria........................................................7
3.3 Types of Mistakes in Building Contracts in Nigeria.........................................8
3.3.1 Unilateral Mistakes..............................................................................8
3.3.2 Bilateral Identical (Common) Mistakes...............................................8
3.3.3 Non-Identical Bilateral (Mutual) Mistakes..........................................9
3.4 Misrepresentation in Building Contracts In Nigeria..........................................10
3.4.1
Meaning of Representation.................................................................10
3.5 Types of Actionable Misrepresentation in Building
Contract In Nigeria.............................................................................................11
3.5.1 Innocent Misrepresentation...................................................................11
3.5.2
Negligent Misrepresentation..................................................................11
3.5.3
Fraudulent Misrepresentation................................................................11
CHAPTER FOUR...............................................................................................................11
4.0
Conclusion.................................................................................................................11
References............................................................................................................................12
CHAPTER ONE
1.0
INTRODUCTION
A contract is a promise or a set of promises for the breach of which the law gives a
remedy or the performance of which the law in some way recognizes as a duty (American
Restatement of Contracts).
A Building contract is a written agreement having the force of law, between two or
more people or groups to carry out a building or engineering project. Every building project
embarked upon by any two parties has a contract document to safeguard both parties engaged
in the project.
1.1
ESSENTIALS OF A BUILDING CONTRACT
For any building contract to be valid it must contain the following essentials:
1. There must be an offer and Acceptance.
2. There must be an Intention to create legal Relations.
3. The building contract must be either under seal or consideration.
4. Parties must have capacity to contract in law e.g of age, of sound mind e.t.c.
5. There must be a genuine consent by the parties to the terms of the contract.
6. The contract must be legal and possible.
1.2
PARTIES TO A BUILDING CONTRACT
1. Client or Employer.
2. The Contractor
3. The Architect
4. The quantity surveyor
5. Sub contractors.
6. Sureties.
1.
The Client/Employer: This is the person or organization that commissions
the building work and directly or indirectly employs the services of the professional in
the building Industry. He analyses and all relevant information available such as
space, location, use, cost of building and time limit for clear explanation to
professional contractor.
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2.
Contractors: This is a person or firm that undertakes the construction work
required by the client with the assistance of professionals.
3.
Architect: The architect is employed by the client to act as his agent in order
to make the design and construction stages successful. The architect interprets the
client’s requirements into specific design or scheme. He recommends a suitable
contractor to his client and further supervises the construction of the building. In
addition, the architect keeps his client informed of progress of work.
4.
Quantity surveyor: The quantity surveyor is the project accountant who
works in conjunction with the site managers. The quantity surveyor assists the clients
in controlling the cost of the project from the Inception to the completion stage. This
includes preliminary cost advice, preparation of bill of Quantities, monthly valuation,
assessment of claims, variations.
5.
Sub Contractors: This is a person or a firm employed to complete parts of the
construction work that the main contractor is unable or unwilling to undertake.
6.
Sureties: These are people or firm involved in a building contract who may
guarantee the performance of the works by the contractor or payment by the employer
or the good faith of the architect or either people having control of money such as
Insurance Companies.
1.3
BUILDING CONTRACT DOCUMENTS
The following are the essentials of Building contract Document:
(i) Articles of Agreement: This usually sets out the date when the contract is to be
completed. It indicates the parties involved in the contract, the works that are to be
done and other considerations. The names and role of the contractor, the employer
and the architect and Quantity surveyor are reflected in the contract documents.
(ii) Conditions: In a contract, elaborate conditions under which the contract is to be
executed are made part of the document. It is an attempt to provide for the various
problems which can arise during and after the execution of the work.
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(iii) Working Drawing: These are working details of the project supplied to both
employer and contractor. The contractor followings these drawings very rigidly.
No alterations must be made without due consultations with the architect and the
employer.
(iv) Bill of Quantities: The bill of quantities is a document which provides a complete
specification of what is required and all the materials and labour necessary for a
given construction. The bill of Quantities is usually prepared for the client by a
professional quantity surveyor. It specifies the materials and methods of work to
used as well as the quantities of work to be done. It includes all the information
that will affect the price. Although submitted to the contractor for tender, the bill
of quantities may be agreed upon to form part of the contract document.
(v) Specification: Specification is a term used to refer to a document which is
prepared by the architect, quantity surveyor, builder or an estimator to supplement
building drawings. The specification indicates the quality of materials such as
mixes of concrete, types of bricks and quality of timber as well as methods of
work, such as how concrete is to be mixed or how brickwork is to be protected.
Specification states the following:
a. The kind and Quality of the materials to be used.
b. The sizes of the materials.
c. The methods of Joining and fixing the materials.
d. The quality of workmanship required.
e. The type and degree of finish required.
When the contract has been signed the contractor is given by the architect the following:
1. One copy of the Articles of Agreement, certified on behalf of the employer.
2. Two copies of the contract Drawings.
3. Two copies of the Specification.
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CHAPTER TWO
2.0
TYPES OF BUILDING CONTRACTS IN NIGERIA
The types of contract in Nigeria used in building construction include:
1. LUMP SUM CONTRACT: This is otherwise called fixed price contract. It is an
agreement in which the price of the contract is agreed upon between the works
commences and so the contractor carries some risk. It is suitable for a project which
can be completely and accurately documented in time to permit estimation and
tendering. Variants of lump sum contract are:
a.
Measure and value contracts: these are contracts based on schedule of rates,
approximate quantities or bills of quantities. When based on bills of quantities, both
the quantities and unit rates in the bills form part of the contract.
b.
Contracts based on Drawing and Specifications: In this case complete working
drawing and full specification are made available tenderers. The tenderer is therefore
responsible for taking-off quantities and preparing his own estimate.
2.
COST REINBURSEMENT CONTRACT: This is also known as prime cost or
cost plus contract. It involves paying the actual cost of the contract, which is material,
labour, plant and a certain amount paid as profit and overhead. The overhead and
profit can be paid in three ways:
a. Cost plus percentage: The contractor is paid the actual cost of the work plus an
agreed percentage to cover profit, risk and overhead.
b. Cost plus fixed fee: This involves the payment of the prime cost of the
contract plus an agreed fixed lump sum. This lump sum does not fluctuate
with the final cost of the contract. This method reduces wastefulness on the
side of the contractor.
c. Cost plus fluctuating fee: The contractor is paid the actual cost of the work
plus a fee. This fee is determined with reference to a sliding scale. The lower
the final cost of the contract, the greater the fee payable to the contractor. This
encourages contractors to execute the work efficiently.
3. TARGET COST CONTRACTS: Usually, a target cost is agreed between the client
and the contractor at the beginning of the contract such as an accepted tender figure.
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The two parties then agree to pay a fixed fee above the prime cost. The actual fixed
fee paid will be the agreed fixed fee plus or less an agreed percentage of the saving or
loss between the target estimate and the actual cost of execution.
4. DESIGN AND BUILD CONTRACTS: Under this form of contract, the contractor is
responsible for both the design and construction of the project. The contractor may
use his own design team or private designers to prepare the scheme which must
satisfy the client’s requirements.
5. MANAGEMENT CONTRACTING: This type of contract provides the client with
the services of a qualified management contractor to ensure that projects will be
designed and constructed in an efficient manner possible. The management contractor
is not involved in actual construction. The work is broken into smaller packages and
sub-contracted to different contractors. He only provides the managerial skill for coordinating the sub-contractors.
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CHAPTER THREE
3.0
MISTAKES AND MISREPRESENTATION OF BUILDING CONTRACTS IN
NIGERIA
3.1
INTRODUCTION
A contract which is regular in all respects may still fail because there is no real
consent to it by one or both of the parties. There is no consensus ad idem or meeting
of the minds. Consent may be rendered unreal by mistake, misrepresentation, duress
and undue influence. There are also instances of inequality of bargaining power where
it would be inequitable to enforce the resulting agreement.
It
is
particularly
important
to
distinguish
between
mistake
and
misrepresentation because a contract affected by mistake is void, whereas a contract
affected by misrepresentations in only voidable. As between the parties themselves,
this makes little difference since in both cases goods sold and money paid can be
recovered. However, the distinction can be vital so far as third parties are concerned.
If A sells goods to B under circumstances of mistake and B resells them to C, then C
gets no title and A can recover the goods from him or sue him for damages in
conversion. If, on the other hand, the contract between A and B was voidable for
misrepresentation, then if B sold the goods to C who took them bona fide and for
value before A had rescinded his contract with B, then C would get a good title and A
would have a remedy only against B.
3.2
MISTAKES IN BUILDING CONTRACTS IN NIGERIA
Mistakes, to be operative, must be of fact and not of law. Furthermore, the
concept has a technical meaning and does not cover, for example, errors of judgment
as to value. Thus, if A buys an article thinking it is worth £100 when in fact it is worth
only £50, the contract is good and A must bear the loss if there has been no
misrepresentation by the seller.
If a person signs a contract in the mistaken belief that he is signing a document
of a different nature, there may be a mistake which avoids the contract. He may be
able to plead non est faction (‘it is not my deed’). This is a defence open to a person
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who has signed a document by mistake. Originally it was a special defence to protect
those who could not read who had signed deeds which had been incorrectly read over
to them. At one time the defence was available only where the mistake referred to the
kind of document it was and not merely its contents. Now the defence is available to a
person who has signed a document having made a fundamental mistake as to the kind
of document it is or as to its contents. However, the defendant must prove that he
made the mistake despite having taken all reasonable care. If he is negligent he will
not usually be able to plead the defence. This means that the plea is rarely successful
and in practice not very significant.
3.3
TYPES OF MISTAKE IN BUILDING CONTRACTS IN NIGERIA
3.3.1 UNILATERAL MISTAKE
Unilateral mistake occurs when one of the parties, X, is mistake as to some
fundamental fact concerning the contract and the other party, Y, knows, or ought to know,
this. The latter requirement is important because if Y does not know that X is mistaken the
contract is good.
EFFECT OF UNILATERAL MISTAKES IN EQUITY
If the plaintiff is asking for an equitable remedy, such as rescission of the contract or
specific performance of it, then equitable principles will apply. As far as unilateral mistake is
concerned, equity follows the principles of the common law and regards a contract affected
by unilateral mistake as void and will therefore rescind it or refuse specific performance of it.
Rectification of the contract is also available.
3.3.2 BILATERAL IDENTICAL (OR COMMON) MISTAKE
This occurs where both parties are mistaken and each makes the same mistakes. There
is no general rule that common mistake affects a contract and in practice only common
mistakes as to the existence of the subject matter of the contract or where the subject-matter
of the contract already belongs to the buyer will make the contract void at common law.
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EFFECTS OF IDENTICAL BILATERAL MISTAKE IN EQUITY
1. Cases of res extinct and res sua: Equity treats these in the same way as the common law,
regarding the agreement as void. The equitable remedy of specific performance is not
available for such an agreement which may also be rescinded.
2. Other cases: Equity will apparently regard an agreement affected by common mistake as
voidable even though the case is not one of res extincta or res sua.
3. Rectification: If the parties are agreed on the terms of their contract but because, for
example, of drafting or typing errors certain terms are set out incorrectly, the court may
order equitable rectification of the contract so that it properly represents what the parties
agreed.
3.3.3
NON – IDENTICAL BILATERAL (OR MUTUAL) MISTAKE
If X offers to sell car A and Y agrees to buy, thinking X means car B, there is a
bilateral mistake which is non-identical. It will be remembered that in the previous category
the mistake was bilateral but both parties had made an identical mistake. Confusion of this
non-identical bilateral kind generally exists in the mind of one party only and may therefore
have no effect on the contract.
Effect of non-identical bilateral (or mutual) mistake at common law
The contract is not necessarily void because the court will try to find the ‘sense of
promise’. This usually occurs where, although the parties are at cross purpose, the contract
actually identifies a credible (or believable) agreement.
If the parties are at cross purposes and the contract does not identify a credible (or
believable) agreement it is void.
The basis of the ‘sense of the promise’ rule is that the court does not ascertain
contractual intent from what is in the minds of the parties, ie a subjective intent, because the
parties are confused. Instead the court decides contractual intent in an objective way by
looking at the parties’ dealings to see if these identify a contract. If they do, the court will
enforce it. If not the transaction is void.
EFFECT OF NON-IDENTICAL BILATERAL (OR MUTUAL) MISTAKE IN
EQUITY.
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Equity also tries to find the sense of the promise as identified by the contract, thus
following the law. However, equitable remedies are discretionary and even where the sense
of promise as identified by the contract can be ascertained equity will not necessarily grant
specific performance if it would cause hardship to the defendant.
3.4
MISREPRESENTATION OF BUILDING CONTRACTS IN NIGERIA.
Misrepresentation is an expression used to describe a situation in which there is no
genuineness of consent to a contract by one of the parties. The effect of misrepresentation on
a contract is less serious than that of mistake because the contract becomes voidable and not
void. This means that the party misled can ask the court to rescind the contract, i.e to put the
parties back into the positions they held before the contract was made. Thus in a sale of goods
the goods would be returned to the seller and the money to the buyer.
However, the effect on third parties is more fundamental because if A sells goods to B
under circumstances of misrepresentation by B and before A has a chance to rescind the
contract B sells the goods to C, who takes them for values without notice of the
misrepresentation, C has a good title and A cannot recover the goods or sue him to the
conversion.
3.4.1 MEANING OF REPRESENTATION
A representation is an inducement only and its effect is to lead the other party merely
to make the contract. A representation must be a statement of some specific existing and
verifiable fact or past event. It becomes a misrepresentation, of course, when it is false.
However, a statement which is not entirely false but a half-truth may be a
misrepresentation.
There are four ingredients and they are as follows:
1.
There must be a statement
2.
Specific existing and verifiable fact or past event.
3.
The statement must induce the contract.
4.
Knowledge that the statement is untrue.
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3.5
TYPES
OF
ACTIONABLE
MISREPRESENTATION
IN
BUILDING
CONSTRUCTION IN NIGERIA.
3.5.1 Innocent Misrepresentation
A purely innocent misrepresentation is a false statement made by a person who had
reasonable grounds to believe that the statement was true, not only when he made it but also
at the time the contract was entered into. As regards reasonable grounds, the representer’s
best hope of proving this will be to show that he himself had been induced to buy the goods
by the same statement, particularly where he is not technically qualified to verify it further.
3.5.2 Negligent misrepresentation
A negligent misrepresentation is a false statement made by a person who had no
reasonable grounds for believing the statement is true. The party misled may sue for
rescission and/or damages and the requirement to prove that the statement was not made
negligently but that there were reasonable grounds for believing it to be true is on the maker
of the statement.
3.5.3 Fraudulent misrepresentation
A fraudulent misrepresentation is a false representation of a material fact made
knowing it to be false, or believing it to be false, or recklessly not caring whether it be true or
false. Mere negligence is not enough. An element of dishonesty is required.
4.0
CONCLUSION
The study of mistakes and misrepresentation of building contract in Nigeria is very vital
and essential and must be properly understood since it is a prevalent occurrence in most
building contract transaction.
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REFERENCES
Fadamiro J.A. and Ogunsemi D.R:
Fundamentals of Building Design, Construction and
Materials.
Dennis Keenam: Advanced Business Law
Professor Olu Ola Ogunsote: Building Law Lecture Notes.
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