13/08/2024
ACTION FOR MONEY HAD AND RECEIVED DUE TO TOTAL FAILURE OF CONSIDERATION
An action for money had and received is an action based on breach of contract. A contract is a promise or a set of promises, for breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty. A contract is the result of the mutual assent of two parties to certain terms and there is no concluded binding agreement unless and until the terms are ascertained either expressly or by necessary implication. It is a legally binding agreement between two or more persons whereby rights and duties are acquired by one party in return for acts or forbearances on the part of the other. A contract creates obligations that are enforceable or otherwise recognizable at law and thus, an enforceable agreement between two or more parties to do or not to do a thing or set of things. A contract is formed once there is an offer by the offeror to the offeree which is accepted by the offeree backed by consideration. At that point in time, the parties to the contract are said to be ad idem or in agreement and such agreement or contract becomes binding on both parties and is enforceable by action.
A contract may be formal or simple; oral (parol) or written. An implied contract on the other hand is a contract whose terms are not expressly stated but come into existence by the conduct of the parties. A contract may also be bilateral (synallagmatic) when formed by an exchange of promises regarding an obligation to be performed in the future. Each party undertakes a performance reciprocally so that the obligation of one party is correlative to the other’s obligation. In a bilateral contract, a promise, or set of promises on one side is exchanged for a promise or a set of promises on the other side.
In a unilateral contract, on the other hand, a promise on one side is exchanged for an act or a forbearance on the other side. Typical examples of bilateral contracts are contracts of sale, the buyer promising to pay the price and the seller promising to deliver the goods; or a promise of a reward for the finding of a property. In FGN & ORS v. ZEBRA ENERGY LTD (2002) LPELR-3172(SC), Per UTHMAN MOHAMMED, JSC (Pp 15 - 15 Paras E - F), the issue before the court was whether an offer for a unilateral contract is accepted on commencement of performance. It was held that,
It is settled law that the offer to enter into a unilateral contract is accepted on commencement of performance, even though completion of performance is a condition precedent to the roofer's liability to perform his promise. See Halsbury's Laws of England, 4th Edition, Vol. 9(1) paragraph 657. In Errington v. Errington and Woods (1952) 1 All ER 149 the facts support the above statement of the law.
It is unilateral because only one party makes the promise and the other party enters into the contract by acting, as he is otherwise not obligated to act. In the case of AMANA SUITES HOTELS LTD v. PDP (2006) LPELR-11675(CA) Per ABDU ABOKI, JCA (Pp 31 - 32 Paras C - F), it was held that,
In a unilateral contract, consideration which is an integral part of any binding contract consists of actual performance in return for a promise (reward). The performance is referred to as executed consideration. See Carlill v. Carbolic Smoke Ball Co. (1893) 1 Q.B. 256. Unilateral contracts are better-illustrated by the reward cases. These are cases in which the offeror or promisor offers a reward for information leading to recovery of a lost object, or arrest and conviction of criminals. In such situations, the offeree "accepts" the offer by actually providing the information or locating the missing object and reuniting it with the offeror. The act of finding or giving the relevant information constitutes the consideration furnished by the offeree. Only one party, the offeror or promisor, is under a contractual obligation at any relevant period in a unilateral contract. Another source of unilateral contract is the sales promotion offers whereby consumers are promised prizes by manufacturers of sparkling drinks, if they could produce a bottle cap containing a particular symbol, or a series of bottle caps which can together form a particular word. The promotional advertisement constitutes an offer to the whole world which matures into a contract when any consumer fulfils the terms of the offer by producing the requisite cap or caps. By contrast, a bilateral contract consists of the offeror promising to do something in exchange for the offeree promising to do something else in return. The consideration (the mutual promises) is referred to as Executory consideration.
For a valid contract to emerge, there are five elements that must be present and recognisable. These are offer, acceptance, consideration, intention to create legal relationship, capacity to create legal relationship and capacity to contract.
Consideration is the obligation which parties to a contract undertake for the benefit of each other. It must be of value in the eye of the law. Where the plaintiff has paid money to the defendant on the consideration that has failed completely because the other party did not furnish any consideration, then we say that a cause of action has arisen for money had and received due to total failure of consideration.
According to the Black’s Law Dictionary, 9th Edition, failure of consideration is “a seriously deficient contractual performance that causes a contract’s basis or inducement to cease to exist or to become worthless”. In the case of OZIMS V. ANORUO (1991) 3 NWLR (PT. 181) 571, Oguntade, JCA; (as he then was), dwelling on the legal basis of money had and received held thus:
“An action for money had and received, simpliciter, is based on what is generally described as quasi-contract. It is an equitable remedy for which the action lies for the recovery of money had and received under circumstances where any notion of an actual contract is excluded. It lies for money paid by mistake; or upon a failure of consideration, or for money gotten by imposition, expresses or implied;…It is imposed by the court under circumstances which it considers just and reasonable having regard to the relationship of the parties on equitable grounds…”.
Also, in the case of F.B.N PLC V. OZOKWERE (2006) 4 NWLR (PT. 970), the Court of Appeal per Galadima, JCA held thus:
“The cause of action for money had and received for consideration that has failed, is founded on the equitable doctrine of quantum meruit. The 7objective is to eliminate the concept of unjust enrichment. It is now trite that, where a party pays money to another under an ineffective contract, the party who pays is entitled to recover the money in quasi contract as money had and received for a consideration that has failed”.
Furthermore, in DANTATA v. MOHAMMED (2000) 7 NWLR (PT. 664) 176, the court held:
“It is a trite law that a complete failure of consideration in an agreement/contract occurs where one of the contracting parties fails to receive the benefits of what he paid for. Where there is a claim of total failure of consideration, the Innocent party is entitled to restitution”.
In summary, an action for money had and received for total failure of consideration is otherwise an action for breach of contract.
