UBA v Tejumola: The parties to this suit entered into an agreement for a lease of a particular property though exchange of letters which were merely negotiations. While the Plaintiff contends that the contract was completed and had already crystallized by the virtue of the exchange of letters, the Defendant who opted out of the contract contends otherwise. The Plaintiff then sued the Defendant for breach of contract.
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Issues determined United Bank For Africa Ltd V Tejumola & Sons Ltd
a. Agreement for a lease, when the contract is said to have commenced.
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Facts of the case of United Bank For Africa Ltd V Tejumola & Sons Ltd
In this case, the Plaintiff (Tejumola and Sons Ltd) instituted an action in the Lagos State High Court against the Defendant (UBA) for breach of contract. The Plaintiff claimed the sum of two million naira for general and special damages. The fact of the case is that there was an ongoing negotiation in respect of a proposed lease of property between the Plaintiff and the Defendant. The Defendant wrote to the Plaintiff a letter dated 19th of April, 1982 wherein he made an offer to rent a property belonging to the Plaintiff situate at No 3 Docemo Street, Lagos.
The offer was made subject to the terms and conditions as was stated in the letter. In the letter, the Defendant specifically reserved the right to opt out of the lease at a specified determinable time. The offer was at the rate of N215 per square meter a year on a term that it can be revised after every 5 years. Another term was that the payment could be made by way of 5 years advance payment. The Defendant agreed to rent some part of the ground floor and then the four upper floors. The Plaintiff accepted the offer wholly in his reply letter.
Afterwards, the Defendant directed the Plaintiff on how to alter the structure of the property in order to fit into that peculiar to banking office according to the taste of the Defendant. The Defendant’s contention was that they had not completed the negotiations pertaining to the contract, moreso that the letter of acceptance which they (the Defendant) wrote to the Plaintiff clearly bears, “Subject to Contract” as the heading.
The Defendant therefore contended that their agreement with the Plaintiff did not specify the commencement date of the lease as a matter of certainty required by the law. In the course of the trial, letters written by the parties to themselves in respect of their negotiations were tendered as exhibit. It was through one of the letters that the Defendant requested the Plaintiff to make alteration o the property in order to suit the purpose of banking business, which the Plaintiff did.
In further exchange of letters, the Defendant disclosed their doubt as to the quality of the structure which the Plaintiff sought to lease to them. This was because, according to the Defendant, they got information that the building once collapsed during construction. Engineers were hired by both parties for the inspection of the property. All the Engineers so engaged confirmed the structural fitness of the property for the purpose of baking business. The staff of the Defendant also came afterwards and inspected the property specifically.
Meanwhile, the Defendant included in their acceptance letter that it was subject to the ascertainment of the nature of the Plaintiff’s title to the property. After all inspections had been carried out, the Defendant wrote to the Plaintiff stating that they were no longer interested in obtaining lease of the said property. It is on this basis that the Plaintiff sued the Defendant for breach of contract claiming for consequential damages arising from the breach.
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Judgment of the court in United Bank For Africa Ltd V Tejumola & Sons Ltd (1988) 2 NWLR (T79) 662
The High Court relied on one of the exhibits tendered and admitted which stated the date when physical possession of the property was to be given by the Plaintiff to the Defendant, being 1st May, 1982, and held it to be the date on which the lease contract between the parties commenced.
The trial court discountenanced the argument of the Defendant that their contract was still in the negotiation state and therefore was yet to crystallize into a contract proper. The trial court held in favour of the Plaintiff and awarded a total of N732, 200 against the Defendant, N200, 000 being for general damages, and N532, 200 being for special damages.
The Defendant was dissatisfied with the decision of the trial court; the Defendant (now the Appellant) lodged an appeal to the court of Appeal on the ground that the date implicated as the commencement date in the exhibit was merely a proposed date which both parties had not agreed on. The Court of Appeal again rejected this contention and upheld the decision of the High Court, finding the Appellant liable for breach of contract. The court further stated that from the totality of the evidence, the proposed date, 1st May, 1982 was not in doubt and it was not rebutted by the Appellant (UBA).
On further appeal to the Supreme Court, the Supreme Court considered all contentions from both parties and other relevant decisions, and held that as a principle of law, an agreement for a lease must be signed before the lease can be said to have properly commenced. The agreement but the definite, and the minds of the parties must have met together in respect of the cardinal matters of the agreement of which the date for commencement of the lease in this matter was a cardinal matter.
The court noted that the Plaintiff had incurred expenses pursuant to the negotiation when he expended on inspection and restructuring the property to the taste of the Defendant/Respondent. However, this is cannot be an inference to the effect that the Defendant had agreed on the propose date. It does not also fit in for the doctrine of estoppel to be invoked against the Plaintiff/Appellant.
Moreover, it was not shown that the Defendant actually took physical possession of the said property. The Supreme Court also considered the provision of section 5 of the Law Reform Contract Law as was referred to by the Defendant, which provide that a contract must be in writing and signed in order to become binding.
The Supreme Court thereon allowed the appeal and overturned the decisions of the courts below. The court observed that inasmuch as the Plaintiff had incurred expenses, he would have been on a safe side if e has engaged a lawyer at the point of the negotiation.
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