Acceptance of a bid may create a valid contract – SC
This is an appeal against the judgment of the Court of Appeal, Abuja Division (‘’the court below’’ for short) delivered on 5th April, 2007 wherein it dismissed the appeal of appellant herein and affirmed the decision of the trial Federal High Court (‘the trial court’ for short) which found that there was no valid or […]
This is an appeal against the judgment of the Court of Appeal, Abuja Division (‘’the court below’’ for short) delivered on 5th April, 2007 wherein it dismissed the appeal of appellant herein and affirmed the decision of the trial Federal High Court (‘the trial court’ for short) which found that there was no valid or enforceable contract between the parties herein capable of being enforced by the court.
At the trial court, the appellant, as plaintiff thereat, claimed against the defendant, the respondent herein, some declaratory reliefs. Violation of the contract between the plaintiff and the defendant’’
It is of moment to state it here that upon the exchange of pleadings at the trial court, parties adduced evidence and learned counsel to the parties thereafter addressed the court.
In his judgment, the learned trial judge dismissed the plaintiffs claim.
The plaintiff felt aggrieved and appealed to the court below which heard the appeal and dismissed it on 5th April, 2007. The court below dismissed the appeal.
This is a further and final appeal to this court. At this point, it is apt to state the facts which are relevant in the determination of the appeal.
The respondent advertised for expression of interest by interested bidders for the privatization of the Aluminium Smelter Company of Nigeria (ALSCON). The appellant completed the request for proposals (RFP) issued by the National Council on privatization (NCP). The said RFP completed by the appellant was tendered in evidence at the trial court as Exhibit D1. Therein, it is confirmed that a bidder will be selected on the basis of evaluation and selection procedure approval by the NCP and contained in the RFP.
Both the trial court and the lower court concluded that there was no binding contract between the parties capable of legal enforcement. The trial court, as confirmed by the court below, declared that the parties had not gone too far from an invitation to treat or a mere declaration to enter into negotiations.
The appellant has, with full force, appealed to this court.
On 23rd April, 2012, this appeal was heard.
The position of the law still remains the same. It is that where by words or conduct, a party to a transaction freely makes to the other an unambiguous promise or assurance which is intended to affect the legal relations between them and the former acts upon it by altering his position to his detriment, the party making the promise of assurance will not be permitted to act inconsistently with it. This is as pronounced in Central London Property Trust Ltd. v. High TreesHouse Ltd. (1947) K.B. 130. It has remained good law for a long time now. I approve same without any reservation.
This is confirmed in the extant evidence of DW1 that the event of 14th June, 2004 – the financial bid opening, completed the sale of ALSCON to the appellant.
Viewed properly, the contract between the parties herein is clearly divisible. It seems as if the conclusion of the court below was made without due regard to Exhibits D 1, 3, 4 and 5 which clearly establish a contract between the parties. DW1 said Exhibit D1 conferred some rights on the parties for which the appellant was entitled to consent to the final agreement as in Exhibit 2 before it is finally executed by the parties.
A divisible contract is separable into parts, so that separate parts of the agreed consideration may be assigned to severable parts of the performance. Such divisible agreements admit of pro rata payments for each portion that was performed, and is independent of performance of other parts of the contract.
It is of moment to say it that the reason given for abrogating the contract does not accord with the stipulations in Exhibit 5 the pre-bid conference resolutions which expressly provides that payment of the initial 10% of the purchase price shall be made within 15 working days after the signing of the SPA (Exhibit 2). The respondent had no vires to unilaterally change the mode of payment of 10% of the bid price as unlawfully stated in Exhibit 6. There is nothing unusual in a complex contract for an offer to contain the terms of a prospective contract, See: F.G.N v. Zebra Energy Ltd. (2002) 18 NWLR (Pt. 789) 162.
The reason given by the respondent for abrogating the contract was most unjustified. The reason is contrary to the agreement of parties contained in Exhibit 5. The insertion of the offensive clause that 10% bid price be paid within 15 days of the receipt of Exhibit 6 came after the financial bid opening held on 14th June, 2004. The unilateral alteration runs against sub paragraph (f) of Exhibit 5 – the sealed and agreed terms of the contract. The unilateral insertion of the offensive clause without mutual agreement of the appellant amounted to a breach of the contract between the parties.
It must be reiterated that an enforceable contract was struck by the parties by acceptance of the appellant’s bid on 14th June, 2004. The consideration for same was the bid bond of $1 Million in favour of the respondent. The appellant was the winner at the bid by the fall of the hammer at the auction sale of 14th June, 2004 and its offer was approved NCP. The only aspect remaining is the putting of hands and seals on mutually agreed version of Exhibit 2 and due payment of the 10% bid price within 15 days of signing the agreed contract and the balance of bid price within 90 days.
I now move to the order of specific performance sought by the appellants. In paragraph 5.4 of the respondent’s brief at page 40, senior counsel submitted as follows:-
“Assuming but not conceding that the appeal could succeed, it is our humble but firm submission that the proper order cannot be that of specific performance as ALSCON had already been concessioned to another company, Russal of Russia which had long taken possession of ALSCON and now fully operates the said company.
That being the case, the appellant could only in the event of success in this appeal, be entitled to damages…”
It is not clear to me why the above submission of senior counsel to the respondent has come up. There is no evidence on record that Russal of Russia has taken possession of ALSCON and now fully operates it. Such forms part of address which is ordinarily designed to assist the court. It is not evidence and no fine speech in an address can make up for lack of evidence to prove or establish a fact or else disprove and demolish a point in issue. See: Niger construction Ltd. v. Okugbeni (1987) 4 NWLR (Pt. 67) 738 at page 792.
At the onset, I noted it in this judgment that Rusal was the 2nd bidder whose bid in the sum of US$205 Million with conditional ties was rejected by the respondent. The appellant’s bid in the sum of US$410 Million was preferred by the respondent. The appellant was declared winner at the auction sale conducted on 14th June, 2004. Indeed, if anyone asks me how the name of Rusal has now surfaced on this score, like Sir Thomas Moore, I will say ‘it is not for me to attempt to fathom the inscrutable workings of Providence.’ The respondent should provide the needed answer.
There is no doubt in my mind that an order of specific performance of the contract between the parties is clearly warranted and same is hereby ordered as prayed. The appeal is meritorious in the extreme. It is hereby allowed. The decisions of the two courts below are hereby set aside. The claims of the appellant at the trial court are hereby granted. The following orders are accordingly decreed.
1. An order of specific performance is hereby decreed mandating the respondent to provide the mutually agreed share purchase agreement for execution by the parties to enable the plaintiff pay the agreed 10% of the accepted bid price of US $410 Million (i.e, the sum of US $41 Million) within 15 working days from the date of the execution of the share Purchase Agreement in accordance with the agreement dated 20/5/2004 and 90% balance of bid price shall be paid within 90 calendar days.
2. It is declared that the defendant is bound to accept payment of 10% of the bid price from the appellant within 15 days from the date of signing the share Purchase Agreement (SPA) by the parties.
3. An order of perpetual injunction is made restraining the defendant, its servants, agent privies, management or howsoever called from inviting any further bidding for the sale and acquisition of ALSCON in violation of the contract between the plaintiff and defendant and or from negotiating to sell, selling, transferring or otherwise handing over the Aluminium Smelter Company of Nigeria ALSCON to any person or persons in violation of the contract between the plaintiff and the defendant.
The respondent shall pay N50, 000 costs to the appellant.
Appearances
Chief Wole Olanipekun, SAN; PIN Ikwueto, SAN (with them V.O.M. Alonge (Mrs.); O. Adeyemi; O. Olanipekun; U. Kelechi; N.O. Lasaki; C.I. Mbeari; G.O. Oguugua) For the Appelants
J.N. Egwuonwu (with him D.H. Bwala and U.M. Jawur) For the Respondents