Introduction
Commerce is concerned with the exchange of goods and
services, and the legal framework of ‘exchange’ is provided by the law of contract[1].Indeed
the principles of contract law were
developed primarily in cases concerned with the paradigm commercial transaction,
the contract for sale of goods, and then extended by analogy to other classes
of contract[2]. It
has also been stated that a contract is essentially an agreement that is freely
entered into on terms that are freely negotiated[3].
Contracts are often defined as ’legally enforceable agreements’, but it might
be more accurate to speak of ‘legally enforceable promises’ for in a
contractual dispute, one party is normally seeking to enforce a promise made by
the other; and some contracts do not involve agreements in any real sense of
the word .Although they may be analyzed in terms of ‘agreement’ in order to
satisfy the theoretical requirements of contract Law. However, although recognizing that it is morally desirable at
promises should be kept, the law does
not enforce all promises. It is therefore essential to distinguish between
those promises which are legally enforceable and those which are not[4]
.
Contractual Capacity
For a contract to have any validity in law, the parties making it must have the full legal capacity to do
so. The term ‘capacity’ as used in law
denotes the ability to incur legal liability or to acquire legal rights. Thus
because of the infirmities of certain persons such as infants, illiterates and
lunatic or the peculiar nature of others such as corporations, not all persons
are capable in law of entering into a valid contract. In law, there are natural and artificial persons. The former include
human beings and the latter corporations. Thus, contractual capacity is an
incident of personality. In Nigeria, the requirement of contractual capacity is
important in relation to infants, persons of unsound mind, drunken persons, married
women, illiterates and corporations. Incapacity with respect to those
enumerated above, may affect their apparent rights and obligations created by
the contract. All other persons have full contractual capacity .However, there
is a presumption in the law of
contract that every person has capacity to contract. The onus is therefore on a
party alleging incapacity to prove it[5].
Prima facie, the law assumes that all parties to a
contract have the power to enter into that contract. However, the law places restrictions on the ability
of a number of groups of persons to enter into contractual relations. The idea
of restrictions on contractual capacity belies the underlying reasoning behind
the notion of capacity to contract since the aim of the law is to protect
rather than to restrict. The approach taken by the law depends on whether the person is a natural person or an
artificial person that is, for example a corporation. The traditional role
model of the natural person entering into contractual relations is that of the
sane, sober and adult male individual. Deviation from this model immediately
raises question as to the ability of the individual to negotiate the
responsibilities thrust upon him or her .Thankfully, the capacity of females, in
particular married women to enter into contracts has disappeared in law despite
the persistence of social prejudice; though protection is still imposed on
drunks[6]
However, it is our
agenda in this piece to specifically discuss contractual capacity of two
classes of people i.e. the illiterate and a drunk or intoxicated person.
ILLITERATES
At common law, the
defence of non est factum may be
available to an illiterate person who signs a document under a fundamental
mistake as to its nature or contents[7].Nigerian
law, unlike English law, contains provisions regulating the contractual
capacity of illiterates[8].The
reason is because a vast majority of Nigerian citizens are still illiterate and
so require special protection from fraud. In Nigeria, the Illiterates
Protection Act 1920 [9]
lays down certain requirements for the protection of illiterates. This
protection is only in respect of written documents. Where an illiterate enters
into an oral contract, he is in the same position as any other person[10].
No contractual capacity attaches to an individual merely
because he is an illiterate. However, since illiteracy is sympathetically
regarded as a misfortune and not a privilege, some measure of protection is
accorded to illiterates in their contractual transactions[11].The
statutory protection is provided by the Illiterates Protection Act, 1920. Under the Act , section 3 provides ‘any person
who shall write any letter or document at the request ,or on behalf, or in the
name of any illiterate person shall also write on such letter, or other
document ,his own name as the writer thereof and his address; and his so doing
shall be equivalent to a statement :
(a)that he was
instructed to write such letter or document by the person it purports to have
been written and that the letter or document fully and correctly represents his
instructions; and
( b)if the letter or
document purports to be signed with the signature or mark of the illiterate
person ,that prior to being so signed ,it was read over and explained to the
illiterate person, and that the signature or mark was made by such person.
This requirement must be strictly adhered to, as was held in Osefo V.Uwania[12].
A ‘writer’ in this section is not necessarily the person who
negotiates the agreement, nor, if typed, the typist. Rather, it means the
person who enters the name and address of the illiterate on the document as was
held in Paterson Zochonois &co ltd V.
Gusau[13]
However, there is a conflict of authorities as to whether the
writer’s name and address must be inserted at the time the illiterate enters
into the contract, or whether it may be inserted afterwards .Igbadume V. Bentworth Finance Nigeria ltd[14]
is an authority for the former view and Paterson
Zochonois &co ltd V. Gusau(supra) is for the latter.
It is also uncertain whether ‘illiterate’ means (a) a person
who is unable to read or write in any language(this is the dictionary meaning
adopted by the supreme court in Paterson
Zochonois &co ltd V. Gusau(supra) or (b) a person who is unable to read
or understand the language of the particular document (the meaning preferred by
the High court in Paterson Zochonois
&co ltd V. Gusau(supra) and in
Ntiashagwo V. Amodu[15]e.g.
where a party to a document written in English can read and write Arabic but
not English. The latter meaning may be more consistent with the purpose of the
Act, but it seems to strain the ordinary meaning of the word ‘illiterate’ to an
unacceptable degree.
Non
Compliance
The consequence of non- compliance with the Act are:
(a) a penalty of 50 pounds fine or 6
months imprisonment
(b) the contract is not absolutely void but :
(i) it is not enforceable by the writer insofar as it creates
legal rights for the benefit of the writer;
(ii) it is enforceable at the instance of a third party if he
can establish that the document contains the true intent of the illiterate
person;
(iii) it is enforceable by the illiterate party if he can
prove what happened at the time the document was prepared by the writer and
signed by the parties:DJukpan V. Orovuyor
[16]
(iv)it is enforceable against the illiterate party if he has
received some substantial benefit from the contract or if by his conduct he may
be taken to have affirmed it :Bentworth
Finance (Nig.) ltd V,Awofeso[17]
(v)it is admissible in evidence to prove the existence of
some title or interest in property :Odiuzo
V. Onohwosa[18]
It must be noted that failure to comply with the
provisions of section 3 will be fatal to the admissibility of the document in
any case pending before the court ,and it is also an offence punishable with
fine or imprisonment .Furthermore, if the letter or document is signed or
thumb-impressed by the illiterate, such compliance is evidence that the writer
explained the content of the letter or document to the illiterate before the
latter signed or thumb-impressed it .But, failure to comply with the provision
of section 3 renders the document voidable at the instance of the illiterate. It
should, however be noted that while the illiterate person may rely on the
voidable document to establish a contractual or other claims, the other
contracting party is incompetent to do so[19].
Meaning of
Illiteracy
Generally, no contractual capacity attaches to an
individual merely because he is an illiterate. However, since illiteracy is
sympathetically regarded as a misfortune and not a privilege, some measure of
protection is accorded to illiterates in their contractual transactions through
the instrumentality of the Illiterates Protection Act as discussed above. Its essence
is to prevent any overreaching act or fraud being perpetrated on illiterates by
reason of their inability to read and write. Unfortunately however, the Act
failed to identify or define the class of people that be regarded as
illiterates, in spite of the fact that it chief aim is to protect illiterates
against possible fraud from the other contracting party.
An attempt was made by Federal Supreme Court in Mallam Bade Katowa V.P.Z and Co. Ltd (supra).
At the court of first instance, Bata J, dealing with the same issue ,held the
view that an illiterate is one who is unable to read and write in the language
in which the contract is written .However, one wonders whether Bate ,J’s
definition of an illiterate is not open to criticism .For example, it is obviously
invidious to deny protection to a university graduate in a written contract
concluded with Mallam Dongoyaro in Arabic Language (a language spoken and
written by Mallam Dongoyaro) merely
because the university graduate ,although proficient in three languages, is
unlettered in Arabic language[20].
This view about
the relativity of illiteracy has been given full expression in higher courts
.Thus in SCOA Zaria V. Okon [21],the
Supreme Court held that although a person may be sufficiently literate to sign
his name and read figures, he may not be sufficiently literate to understand
the meaning and effect of the document he is signing, and in such a case, the
provision of section 3 of the Illiterate’s Protection Act must be complied with. In other words, the test of illiteracy
is a functional one.
This position of the law was further confirmed by the Western State Court of Appeal in
Lawal V. G.B Olivant Nig.Ltd [22].In
this case, the plaintiff, as mortgagor, executed a deed of mortgage of his land
in favour of the defendants. The defendants registered the mortgage deed at the
lands registry. The plaintiff brought an action for a declaration that the
registration was illegal, void and of no effect. His case was that as an
illiterate person, and by section 8 of the Land Instruments Registration Law, any instrument involving the
transfer land must be executed in the presence of a magistrate or a Justice of
the Peace, if the grantor is an illiterate person. In determining whether the
plaintiff was an illiterate person ,the court considered whether the
plaintiff understood the purport of his
action at the material time, that is, in this instant case whether at the
execution of the mortgage deed ,which is the subject matter of this action ,he
clearly understood his act by the surrounding circumstances .
Illiterates’
Protection under Land Instruments Registration Law
The Land Instruments Registration Law [23]
is another statute protecting the illiterate person against fraud .Section 8 of
provides:
No
instrument executed in Nigeria after the commencement of this law, the grantor, or one of the grantors , whereof is illiterate, shall be registered unless
it has been executed by such illiterate
grantor or grantors in the presence of a magistrate or Justice of
the peace and is subscribed by such a magistrate or Justice of the peace as a witness thereto
Purpose of
Illiterates’ Protection
The whole purport of protection of illiterates in
contract formation was stated by the Supreme Court in Djukpan V. Orovuyovbe[24]where
it said inter alia ‘the purpose of requiring the particulars and the address is
to trace the writer, especially a professional writer which was not in fact the
position here, and this description was sufficient address to enable him to be
traced’.
Limitation
of Protection
The essence of the law
is to protect the illiterates and not to be used as an engine of fraud .An
illiterate person may not use the provision of these laws as a means of fraudulently evading trading obligation whose
implication he was fully aware of at the time at the time of the bargain was
struck. Thus, it is possible for a person who is technically illiterate to be
denied the protection of the law if
it appears that he understood the purports of the bargain, even though the
other party failed to comply fully with the provisions of the law.
Thus, in Lawal
V. G.B Olivant (Nig) ltd (supra), the plaintiff’s excuse that he handed
over his title deeds to the defendant on the belief that he (the plaintiff) was
acting in the role of a witness to a sale of goods by the defendant to his (the
plaintiff’s) friend, rather than as a mortgagor of his property was patently
false. After reviewing the facts of the case, the court declared that the
purport of the word ‘illiterate’ in the law was not merely one of form but one
of essence:
a man may not be liable to read or write
any language but he may very well understand the purport of his action and
intend it .If he is mortgaging his property and understands what he is doing
clearly, then he is not an illiterate for the purpose of the law just because
he can neither read or write. To declare him an illiterate would give him a
technical but unjust advantage and assist him to avoid his own intended action.
This cannot be the law.
In view of the foregoing, the court concluded that the
plaintiff understood what he was doing, and was therefore outside the
protection of the law.
INTOXICATED
PERSON OR DRUNK
On principle, a contract cannot exist except there had
been an agreement. In short, as far as the respective parties to the contract
are concerned, there must be consensus ad idem[25].From
a logical point of view, it ought to follow that a person of unsound mind; intoxicated
or a drunk cannot enter into a contract for he would be lacking the genuine
consent necessary for its formation. However, the law is not strictly logical as that.
First, the general rule in contracts with drunken
persons is that they are prima facie bound by the contract they make. Such
contracts are however voidable at the instance of the drunken persons i.e.
binding until repudiated within a reasonable time after the person must have
recovered or of being sober, unless they show that:
(1)at the time of the contract, their mental condition
was such that they could not understand what they were doing i.e. appreciate
the nature of their act and;
(2)that the other party to the contract was aware of
their condition[26].Thus
in Manches V. Trimborn[27],where
an old lady who had drawn a cheque successfully repudiated liability thereon on
the ground that she was ,to the drawee’s knowledge, incapable of understanding the
transaction of which the cheque formed a
part. But knowledge of this kind is immaterial when the contract is
made.
Secondly, it is well established that where
necessaries are supplied to a drunken person or his wife, suitable to his
station of life. Section 2 of the SOGA 1893 provides that he must pay a
reasonable price for them. In other words, an implied obligation arises for him
to pay for them out of his property [28].In
such a situation, it is immaterial that his condition is known to the other
party, who, nevertheless must have intended to be repaid for the necessaries he
supplied. The obligation to pay has been converted by the SOGA 1893, into a
statutory obligation to pay a reasonable, not necessarily the contract price. Specifically,
it is provided in section 2of the Act that:
Where necessaries are sold to a person who by
reason of mental incapacity
or drunkenness is incompetent to contract, he must pay a reasonable price therefore.
This rule, was however extended in Re -Beavan[29].There
it was held that, where money Is supplied by way of loan and is spent on the
purchase of necessaries for a lunatic(no less a drunkard),the person so lending
will be subrogated to the rights of the rights of the creditors supplying the
necessaries.
Thirdly, in contracts of marriage, the weight of
judicial pronouncements favour the view that contracts by drunkards like
contracts entered into by insane persons, are voidable, if the drunkard was so
intoxicated as to be incapable of comprehending the nature and effect of the
contract, and it is irrelevant whether the mental state was voluntary or
otherwise. However, slight intoxication which does not dethrone a person’s
reason and comprehension may be insufficient to affect the validity of the
contract.
A contract with a drunk ,though voidable and not
void,at the opinion of the drunken person may, when he regains his sobriety be
ratified by him[30].Again,
if the lunatic contracted during a lucid interval or the drunkard contracted
after he regained his sobriety ,the contract is valid and enforceable. But the
other contracting party or any third party cannot attack the validity of a
contract by pleading the infirmity or insobriety of the drunken person, because
these pleas are the exclusive privilege of the person under disability .As
already stated, section 2 of the SOGA 1893, provides that drunkards must pay a
reasonable price therefore, for necessaries furnished to them[31]
The Rule in
Hart V. O’connor
Since the position of the law in respect of
intoxicated person is almost analogous to that of persons with unsound mind, then
it is apposite here to refer to Hart V.
O’connor[32]
wherein in 1977, the appellant entered into an agreement to buy farmland in New
Zealand which was the subject matter of a testamentary settlement. The
agreement was expressed to be made between the appellant and J, the sole
trustee of the trust estate. The initiative for the sale came from the trust’s
solicitor and members of the testator’s family. All the terms of the agreement
were drawn up by the trust’s solicitor, including provision for valuation of
the property and the nomination of a valuer .The trust’s solicitor sent the
agreement to the appellant’s solicitor
for approval and took it to J for signature. Unknown to the appellant, J was of
unsound mind when he signed the agreement .In May 1980, the respondents, the
then trustees and beneficiaries of the estate, applied to set aside the
agreement on the ground that J was of unsound mind when he entered into it and
the contract was unfair to him. The valuer nominated by the trust’s solicitor
had valued the land at $180,000 as at 1st of September 1977, whereas
the respondent trustees’ valuer later valued the land at $197,000 as at that
date. The trial judge held that although J’s unsoundness of mind was not
apparent, his unsoundness of mind coupled with the unfairness of the contract
which resulted because of the parties’ consequent inequality of bargaining
position made the contract unenforceable. However, the Judge gave judgment for
the appellant on the ground that the respondents had been guilty of laches. The
New Zealand Court of Appeal allowed an appeal by the respondents.
The appellant appealed to the Privy Council where it
was held inter alia:
If a contract is stigmatized as ‘unfair’
,it may be unfair in one of two ways
.It may be unfair by reason of the unfair manner in which it was brought into
existence; a contract induced by undue influence is unfair in this sense .It
will be convenient to call this ‘procedural unfairness’. It may also, in some
context s, be described (accurately or inaccurately) as ‘unfair’ by reason of
the fact that the terms of the contract are more favourable to one of the
parties than to the other. In order to distinguish this ‘unfairness’ from
procedural unfairness, it will be convenient to call it ‘contractual
imbalance’. The two concepts may overlap- contractual imbalance may be so extreme
as to raise a presumption of procedural unfairness, such as undue influence or
some other forms of victimization. Equity will not relieve a party from a
contract on the ground that there is a contractual imbalance not amounting to
unconscionable dealing. Of the three indicia of unfairness relied on by the Judge
in Archer V. Cutler[33]
(assuming unfairness to have existed) the first was contractual imbalance and
the second and third were procedural unfairness.
The court went further to say : this
case appears to their lordships to be directly contrary to the proposition
adopted in Archer V. Cutler(supra),because
it plainly recognizes that a contract with an unsuspected lunatic will not be
set aside short of equitable fraud.
To sum the matter up, in the opinion of their
Lordships, the validity of a contract entered into by a lunatic who is
ostensibly sane is to be adjudged by the same standard as a contract by a
person of sound mind, and is not voidable by the lunatic or his representative
by reason of ‘unfairness’ unless such unfairness amount to equitable fraud
which would have enabled the complaining party to avoid the contract even if he
had been sane. For this reason, their Lordships had tendered to Her Majesty
these humble advice that the appeal should be allowed. Now, since the posture
of the law concerning intoxicated
person and persons of unsound mind is almost the same, we want to assume that
this may likely be the opinion of the court in respect of a drunken person
which is our subject matter here.
However, on the other hand, if you manage to buy a
piece of land on a very advantageous terms and subsequently you discover that
you were dealing with an insane person or ‘a poor and ignorant ‘ person, you can keep the land .Why is there
moral fraud in one case but not the other? The philosophies underlying Hart V. O’connor on one hand, and Redgrove V. Hurd, on the other, seem
very different[34]
Conclusion
In view of the above discussion the position of the law in respect of contractual capacity
or the ability to perfect a contract of two important classes of individuals, we
must submit that apart from statutory protection over them, the principle of non est factum (i.e. not my act) may
also be in their favour. However, there is need for caution on the part not to
attempt to use the protection as engine or means of perpetrating fraudulent
acts in their commercial dealings, as this will not allowed by the court.
It must also be noted that a drunkard is not the same
as an intoxicated person. While a drunkard generally means someone who drinks
habitually, an intoxicated person is someone drunk or stable for the moment. Intoxication
may be as a result of drug taking. An intoxicated person who has purportedly
entered a contract must rectify same within a reasonable time after he had
regained sobriety.
I
[1] Bradgate, Robert: Commercial Law,P.35
[2] Bradgate,Robert Op. Cit P.37
[3] as held in W V.
Essex County Council (1958) 3 All E R 111 at 128 per Stuart Smith L J
[4] Bradgate,Robert (supra) P.39-40
[5] Okany, M. C Nigerian Commercial Law, P.
95.
[6] Paul Richards: Law of Contract 4th
ed. P.76
[7] Tunde Amao:Nigerian Law of Contract P.33
[8] defined as a ‘person ignorant of letters or
literature, without education, unlearned or educated person’ in Dan Kantowa V. Petterson Zechonis Co. Ltd
.(1964) NNLR 54
[9] Cap 83 vol.111 LFN 1958 ed.
[10]Tunde Amao Op. Cit. P. 33
[11] Okany M.C :Nigerian Commercial Law P.110
[12] (1971) 1ALR
Comm.421
[13] (1962) 1 All NLR 242
[14] (1965/66) MWNLR 122 i
[15] (1959)WRNLR 273)
[16] (1967) NMLR 287
[17] (1966) 2 ALR Comm.731
[18] (1979) NCLR 314
[19]
Okany Achike, Op. cit P.44-4
[20]
Okany Achike,Nigerian Law of Contract P.132-133
[21] (1960) NRNLR 34,SCN,
[22] (1970) 2 ALR,C Court of Appeal Western State of Nigeria
[23] Cap 56 Laws of Western Nigeria 1959
[24] (1961) NMLR 287 at P.291
[25]Okany M.C (supra)P.105
[27] (1946)115 LJKB 305
[28] Re- Rhodes (1890) 44 Ch D. 94
[29] (1912)1 Ch.196
[31]
Achike,Commercial law in Nigeria P.38-39
[32] (1985)All ER
880,DC
[33] (1980)1 NZLR 386
[34]
H.G Beale,W .D Bishop and M.P Furmston,
Contract: cases and materials ,3rd ed.P.812
No comments:
Post a Comment