Importance of Privity of Contract to The Enforcement of Breach of Same If Any

CASE TITLE: BABCOCK UNIVERSITY v. OYENEYE & ASSOCIATES LTD (2025) LPELR-80853(CA)

JUDGMENT DATE: 3RD APRIL 2025

PRACTICE AREA: LAW OF CONTRACT (PRIVITY OF CONTRACT)

LEAD JUDGMENT: YARGATA BYENCHIT NIMPAR, J.C.A.

SUMMARY OF JUDGMENT:

INTRODUCTION:

The appeal borders on the Law of Contract.

FACTS:

This is an appeal against the judgment of the High Court of Ogun State, sitting at Sagamu Judicial Division and delivered by HONOURABLE JUSTICE A. A. BABAWALE on the 19th day of May, 2017, in Suit No.: HCS/203/2014.

The Appellant is an educational institution, and its pearl graduating class of 2011 sought to execute a car park, buttery, and sit-out project for the Appellant as a legacy project, being their graduation gifts. The Respondent was awarded the contract to execute the projects by Pearl Graduating Class, 2011, and money was disbursed to the Respondent on three occasions, totaling N 9,850,000.00 (Nine Million, Eight Hundred and Fifty Thousand Naira) only. After the third installment, no further payment was made, and the Respondent stopped work on the project site, alleging breach in payment of the 3rd installment. Upon completion of the trial, the Court below found in favour of the Respondent.

The Respondent claimed the following reliefs in its Statement of Claim filed on 8/10/2014:

I. A DECLARATION that the contract awarded to the Claimant by a letter dated 23rd February, 2011, has been breached by the Defendant.

II. A DECLARATION that the Claimant is entitled to full payment of the 2nd and 3rd installments by the Defendant according to the letter of award of contract dated 23rd February, 2011.

III. AN ORDER that the Defendant herein pay the total sum of N2,785,000.00, being the outstanding sum of the 2nd and 3rd payments after certification of the Claimant’s performance of the contract award.

IV. The sum of N1,505,000.00 (One Million Five Hundred and Five Thousand Naira) is the cost of the additional materials and expenses incurred by the Claimant as a result of the variation of the bill of quantity issued by the Defendant.

V. AN ORDER of Court awarding general damages to the sum of N1,000,000.00 (One Million Naira) only to the Claimant herein.

VI. AN ORDER of Court granting 10% monthly interest on the judgment sum from the date the debt became due until liquidation of the judgment sum.

The Appellant’s Statement of Defence filed on 30/3/2015 had a counterclaim against the Respondent as follows:

I. Payment of Twenty Million Naira (N20, 000,000:00) for damages caused by the Defendant.

II. The sum of Three Million Naira (N3, 000, 000) is the cost of this action.

During the trial, the Appellant, in proving his case, called one (1) witness and tendered three (3) Exhibits, namely, Exhibits DE1, DE2, and DE3, while the Respondent also called one (1) witness and tendered nine (9) Exhibits, namely, Exhibits CE1–CE9. A total of 12 exhibits were tendered.

After due consideration, the Court entered judgment in favour of the Respondent.  The trial Court also awarded the sum of N350,000.00 (Three Hundred and Fifty Thousand Naira) only as general damages and costs of N50,000.00 (Fifty Thousand Naira) only. The counterclaims of the Appellant (Defendant/Counter-claimant at the Court below) were dismissed. Dissatisfied with the decision, the Appellant filed this appeal.

ISSUES FOR DETERMINATION:

The Court of Appeal determined the appeal based on the following issues:

1. Whether there is privity of contract between the parties?

2. Whether the lower Court can declare a breach where there is no privity of contract between the parties?

3. Whether the major involvement of the Pearl graduating class (2011) was the provision of funds for the execution of the contract?

4. Whether the judgement of the lower Court was against the weight of evidence?”

DECISION/HELD:

The appeal was allowed.​

RATIOS:

• CONTRACT – PRIVITY OF CONTRACT – Doctrine of privity of contract
• CONTRACT – VALIDITY OF CONTRACT – Essential elements of a valid contract
• CONTRACT – TERMS OF CONTRACT – Whether the terms of their contract bind parties; duty of Court in the construction of the terms of a contract/agreement
• CONTRACT – PRIVITY OF CONTRACT – Whether a contract confers rights or obligations only on parties to it
• JUDGMENT AND ORDER – ORDER OF COURT – Proper order the Court would make where a party is improperly sued in an action
• COMMERCIAL LAW – AGENCY – Whether a person acting on behalf of a known and disclosed principal incurs no liability; liability of a person who makes a contract in his own name without disclosing either the name or the existence of a principal
• ACTION – CAPACITY TO SUE AND BE SUED – Whether a non-juristic person can sue and be sued

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