Whether Sourcing for Funds from a Stranger to a Contract Will Make Same a Party That Can Sue and Be Sued on The Contract

Published:

PRACTICE AREA:  Contract- Parties to Contract

CASE TITLE:  AFRICA HEALTH TELEVISION LTD (AHTV) & ORS v. SWIFT MOH TRAVELS AND TOURS AGENTS NIGERIA LIMITED & ANOR (2022) 57633(CA)

JUDGMENT DATE:  25TH MAY, 2022

JUSTICES:  STEPHEN JONAH ADAH, JCA

BIOBELE ABRAHAM GEORGEWILL, JCA

UGOCHUKWU ANTHONY OGAKWU, JCA

COURT DIVISION:  ABUJA

FACTS:

The Respondents, as Plaintiffs in the trial court in an action on the undefended list, claimed for the sum of N3,001,453.86k (Three Million One Thousand Four Hundred and Fifty-Three Naira Eighty-Six Kobo Only), being the outstanding indebtedness of the Appellants to the Respondents arising from aeroplane tickets issued by the Respondents to the Appellants at their request between 30th March 2018 to 23rd May 2018.

They further claimed Interest on the said sum at the rate of 22% as general damages from the date of the debt for every month until judgment is delivered and 10% interest per annum on the judgment sum from the date of the delivery thereof until the final liquidation by the Appellants; and the sum of N600,000.00 (Six Hundred Thousand Naira Only) as cost of hiring the Respondents’ Counsel and filing the action.

The Respondents’ action was predicated on a Contract Agreement for the purchase of airline tickets, and on which they alleged that the Appellants were owing to them.

The Appellants did not file any Notice of Intention to Defend the action as enjoined by the Rules of the trial Court, whereupon judgment was entered in favour of the Respondents.

Dissatisfied, the Appellants appealed.

An issue as regards the status of the 2nd Appellant who allegedly made payments in respect of the contract into the account of one Funmilayo Ademuyiwa was raised in light of whether the fact of such payment would not make the 2nd Appellant to the contract a person who can sue or be sued on the contract as a consequence.

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ISSUES FOR DETERMINATION

The appeal was determined upon consideration of the issues thus:

1. Whether from Exhibit ‘A’ before the Court, the parties without providing alternative addresses for service are not bound to be served at the respective addresses contained therein, any originating Court process or any other Court process emanating from Exhibit ‘A’.

2. Whether or not non-parties to the contract, Exhibit ‘A’ , before the trial Court, can sue and be sued on the contract or derive any benefit or burden from it.

3. Whether by the provisions of Clause 4 of Exhibit ‘A’, without evidence of renewal, the contract between the parties had not elapsed by effluxion of time as at 23rd of October, 2017.

4. Whether Exhibit ‘C’ before the learned trial Court, without further evidence, earned the high probative essence the learned trial Court placed on it.

5. Whether the learned trial Court was right in awarding an unproved pre-judgment interest at twenty-two (22) per cent per month against the appellants when the pre-judgment interest was not provided for in the contract, Exhibit ‘A’, before the learned trial Court.

COUNSEL SUBMISSION

Appellant’s counsel submitted that based on privity of contract, non-parties to a contract cannot sue or be sued on it, even if the contract is made for their benefit. It was further argued that the 2nd Respondent is not a party to the contract and cannot sue on it, just as the 1st Appellant is not the NGO that is the party to the contract and so it cannot be sued. It was stated that the fact that payments were made by the 2nd Appellant into the account of one Funmilayo Ademuyiwa, for a purpose that is not stated, will not make the 2nd Appellant a party that can be sued on the contract.

The Respondents submit that the 2nd Respondent and 3rd Appellant, being the alter egos of the two companies signed the contract and so they are necessary parties.

DECISION/HELD

In the final analysis, the appeal succeeded and was allowed.

RATIO

  1. CONTRACT- PARTIES TO CONTRACT: Whether sourcing funds from a stranger to a contract for the purpose of making payments in the contract will make such stranger a party to the contact that can sue and be sued on the contract

​“It remains to consider the status of the 2nd Appellant, vis-a-vis Exhibit H, which shows that the 2nd Appellant allegedly made payments in respect of the contract into the account of one Funmilayo Ademuyiwa. Quite apart from the fact as submitted by the Appellants, that Exhibit H does not state the purpose for which the payments were made; it remains immaterial if a contracting party sources funds from a stranger to a contract to make payment on its behalf on the contract. The fact of such payment would not make the stranger to the contract a person who can sue or be sued on the contract as a consequence. Therefore, even though the purpose of the payment made by the 2nd Appellant is not shown on Exhibit H, if for purposes of argument, it was made for purposes of settling the indebtedness on the contract, it would not eo ipso make the 2nd Appellant a party to the contract for purposes of being sued on the contract. See COAST OIL LTD vs. TUBOSCOPE VETCO INTERNATIONAL (supra) at 17-18 and AKINLADE vs. AYINDE (supra) at 21. Paucis verbis, this issue number two is resolved in favour of the Appellants. It is the parties to a contract that can enforce their rights under the contract in an action in Court. Non-parties can neither sue nor be sued on the contract as they derive no benefit nor incur any burden from the contract.” Per OGAKWU, J.C.A.

  • CONTRACT- PRIVITY OF CONTRACT: Doctrine of privity of contract

“The general principle of law based on the doctrine of privity of contract is that a contract, cannot as a general rule confer rights or impose obligations under it on any person, except the parties to it. In aliis verbis, only parties to a contract can sue or be sued on the contract: MAKWE vs. NWUKOR (2001) 14 NWLR (PT 733) 356, IDUFUEKO vs. PFIZER PRODUCTS LTD (2014) 12 NWLR (PT 1420) 96 at 101, REBOLD INDUSTRIES LTD vs. MAGREOLA (supra) and A-G FEDERATION vs. A.I.C. LTD (2000) 4 WRN 96 at 103. In the circumstances of this matter, the parties who can sue or be sued on Exhibit A are SWIFT-MOH TRAVELS AND TOURS LTD and AFRICA HEALTH TELEVISION. No other person, based on the doctrine of the privity of contract, can sue or be sued on the contract, even if it was made for the person’s benefit. The parties on record in the action are not parties to the contract so they can neither sue nor be sued on the contract.” Per OGAKWU, J.C.A.

SOURCE: LAW PAVILLION

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