- Pan Bisbilder Ltd v. First Bank of Nigeria Ltd
- ₦ 200
Pan Bisbilder Ltd v. First Bank of Nigeria Ltd
PAN BISBILDER (NIGERIA) LIMITED
FIRST BANK OF NIGERIA LIMITED
SUPREME COURT OF NIGERIA
ABUBAKAR BASHIR WALI, J.S.C. ( Presided )
EMMANUEL OBIOMA OGWUEGBU, J.S.C
OKAY ACHIKE, J.S.C. ( Read the Leading Judgment )
UMARU ATU KALGO, J.S.C
EMMANUEL OLAYINKA AYOOLA, J.S.C
14 TH JANUARY, 2000
CONTRACT - Breach of Contract - What amounts to
CONTRACT - Illegal Contract - What constitutes
CONTRACT - Illegal Contract and Void Contract - Distinction between
CONTRACT - Illegality - Contract tainted by illegality - Effect
CONTRACT - Illegality - Defence of undue influence - How established
CONTRACT - Illegality - Effect on a party wholly ignorant of illegality
CONTRACT - Illegality - Undue influence - Fraud - Effects
CONTRACT - Void Contract - What Constitutes
EVIDENCE - Unpleaded facts - Evidence in respect of - Relevance of
PRACTICE AND PROCEDURE - Illegal Contracts - Illegality - Reliance on - Need to expressly plead
PRACTICE AND PROCEDURE - Pleadings - Bindingness of - Evidence led on facts not pleaded - How treated
WORDS AND PHRASES - ‘Breach of contract’ - Definition of
WORDS AND PHRASES - ‘Illegal contract’ - Definition of
WORDS AND PHRASES - ‘Void contract’ - Definition of
Whether the diversion of fund under the contract of loan between the parties subsumed under the Agricultural Guarantee Credit Scheme Fund Act, 1977 rendered the said contract illegal and void to the extent that neither the Appellant nor the Respondent can enforce the loan contract.
The Appellant, as plaintiff, engaged in poultry farming, sued the Respondent as defendant in the High Court of Bendel State as it then was for breach of contract claiming a total of N429,869.00 as special and general damages. The alleged breach of contract arose from the failure of the Respondent to honour its loan agreement of N116,500.00 entered into with the Appellant under the Agricultural Guarantee Credit Scheme Fund Act, 1977 , which loan was to be guaranteed by the Central Bank of Nigeria. The loan was to be advanced in two instalments of N60,000.00 and N56,500.00. The first instalment was fully disbursed while the second was only partially disbursed. The Respondent withheld N30,000.00 of the N56,500.00 to off-set a previous overdraft granted to the Appellant. This was in contravention of section 13(1) of the Agricultural Guarantee Credit Scheme Fund Act of 1977.
The Appellant denied any arrangement between the parties to so offset the previous overdraft of N30,000.00 from the second instalment of the loan. The learned trial judge, Oni-Okpaku, J. rejected the Appellant’s denial and found that as evident from the pleadings of both parties, there was an agreement to divert part of the loan to settle the overdraft. The trial court however went on to hold that the defendant exerted undue influence on the plaintiff, hence, the collateral agreement; and this created an exception to the resultant illegality. The court held that there was a breach of contract and awarded the plaintiffs a total sum of N58,429.00 as special damages. The defendant appealed to the Court of Appeal on its liability under the contract, while the plaintiff cross appealed on the quantum of damages. The Court of Appeal set aside the decision of the trial court and held that the defendant Bank was not liable for breach of contract because by the contravention of section 13(1) of the Agricultural Guarantee Credit Scheme Fund Act (20) of 1977 of which both parties were wrong doers, the loan agreement was vitiated.
Sections 13(1), (2) and (3) of the Agricultural Credit Guarantee Scheme Fund Act, 1977 provides:
“S. 13(1)No loan granted pursuant to this Act Shall be applied to any purpose other than that for which the loan was granted.
- Any person who applied any loan granted pursuant to this Act in contravention of subsection (1) of this section shall be guilty of an offence and shall be liable on conviction to a fine of an amount of the loan in respect of which the offence was committed or to imprisonment for not less than five years”
- Where an offence under the section committed by a body corporate is proved to have been committed with the consent, connivance of, or to be attributable to any neglect on the part of any director, manager, secretary or other similar officer of the body corporate (or any person purporting to act in any such capacity) he as well as the body corporate shall be deemed to be guilty of the offence and may be proceeded against and punished accordingly.”
The plaintiff being dissatisfied appealed to the Supreme Court.