"The person or party who falls back on the doctrine of frustration as a defence acknowledges the fact of the existence of a valid contract between him and the party on the other side but for some unforeseen circumstances which could not be attributed to any of the parties, the agreement or contract was aborted and thus cannot be executed.
In the instant case, the Appellants have acknowledged the existence of the contract in terms of Exhibit 'C' but argued that they cannot be tied to the terms of that contract due to some intervening, unforeseen circumstances as in the inability of the Appellants to raise funds to execute or discharge their own part of the agreement. ?Exhibit 'C' is no doubt the contract document referred to by parties on both sides. Same was signed or executed by them on the 11th November, 2008. The terms of the contract are clearly set out in that document and the duties and obligations of either party to the contract also clearly spelt out as for instance, the contract document stipulates among others that:"CONTRACT PERIOD This official works order requirements must be satisfactorily completed within three weeks from the date you take possession of the Official Works Order. PAYMENT A 15% down payment as mobilization fees would be paid to you.
The balance will be paid after certifying delivery with SRA of the material. You will be paid through a certified invoice of your company. MAXIMUM LIABILITY This Work Order shall remain firm and under no circumstances shall PHCN Yola Electricity distribution company entertain any upward review in price(s) or variation in scope except for agreed variation in material(s) rate as might be required by this Company. Any materials damage their replacement shall be bone by your Company without extra cost to Yola Electricity Distribution Company." ?The defence of frustration as a doctrine presupposes the premature determination of an agreement between parties, lawfully entered into and which is in the course of operation at the time of its premature determination, owing to the occurrence of an intervening event or change of circumstance so fundamental as to be regarded by law both as striking at the root of the agreement and entirely beyond what was contemplated by the parties when they entered into the agreement. See: The A-G Cross River State v A-G Federation (2012) LPELR - 9335 (SC); Araka v Monier Construction Company (Nigeria) Ltd (1978) All NLR 219 or (1978) 6 - 7 SC 7 where it was held that the doctrine applies to all categories of contract. See further, Jacob v Afaha (2012) LPELR -7854 (CA).
This Court in Diamond Bank Ltd v Ugochukwu (2008) 1 NWLR (Pt. 1067) has held that the doctrine of frustration has been restricted by the Courts to
(a) Situation where the supervening event destroys a fundamental assumption; and
(b) Where force majeure clauses are drafted into the contract. There must be an event which significantly changes the nature of contractual rights of the parties that it would be unjust to expect the parties to perform those rights. Examples are situations where (1) The subject matter of the contract has been destroyed or is no longer available. (2) Death or incapacity of a party to a contract. (3) The contract has become illegal to perform as a result of new legislation. (4) A contract can be frustrated on the outbreak of war. (5) Where the commercial purpose of the contract has failed. The party relying on the doctrine as a defence must plead and lead satisfactory evidence as self-induced frustration is no frustration at all but a breach of contract. See Jacob v Afaha (supra).
The Plaintiff/Respondent pleaded certain facts at paragraphs 8, 9, 10, 11, 12, 13 and 14 of the Statement of Claim. At paragraphs 8, 12, 13 and 14 in particular, it is averred that: (8) The plaintiff avers that the contract agreement which was duly signed by it and the Defendants provided among other things that a 15% down payment of the contract sum would be paid to the plaintiff as mobilization fee, while the balance would be paid after certifying delivery with SRA of the materials. (12) The plaintiff avers that on 10th December, 2008, 29th December, 2008, 22nd April, 2009, 12th June 2009, 3rd August, 2009 and 28th August, 2009, the plaintiff wrote several letters to the Defendants reminding them of their imminent breach of the contract agreement by their refusal to perform the obligation imposed on them by the contract, as well as requesting for a variation of the contract sum in terms of prevailing prices of the items, copies of the letters written by the plaintiff to the defendants dated 10th December 2008, 29th December, 2008, 22nd April 2009, 12th June 2009, 3rd August, 2009 and 28th August, 2009 respectively are hereby pleaded and Defendants are hereby put on notice to produce the original copies of these letters. (13) The Plaintiff avers that despite the fact that it fulfilled all the conditions set out by the defendants for the performance of the contract, the Defendants still failed to fulfill their own part of the contract. (14) The Plaintiff avers that the Defendants did not respond to any of the letters mentioned in paragraph 15 above, but rather continued promising and assuring the plaintiff orally, that they would perform the said contract. PW1, the only witness who testified for the Plaintiff/Respondent in the course of his evidence tendered several documents among which are Exhibits K and K1 - 5.
These are several letters written for and on behalf of the respondent and directed on the Appellants requesting of the appellants to observe the terms of the agreement and make necessary payments, in particular, the payment of the 15% down payment as agreed between them. There was no response from the Appellants to any of those letters nor did Appellants ever indicate they had certain financial challenges as at the time when Exhibit F, K1 - 5 were written and addressed to the Appellants. It is worthy of note that those facts and evidence coming from the Plaintiff/Respondent were never controverted by the Appellants either by way of cross-examination or in their evidence. The claim by them that the purpose of the contract had been frustrated for lack of funds, is anything but false. Such is a self-induced frustration. A false claim to defence of frustration cannot avail the party or person in default as held in Jacob v Afaha (supra). This is a clear case of breach of the contract entered between the parties in the year 2008."
Per HUSAINI, J.C.A IN PHCN & ANOR v. ATLAS PROJECTS LTD CITATION: (2017) LPELR-43622(CA)
