Introduction
The case of Adecentro (Nig) Ltd v Council of Obafemi Awolowo University [1994] 1 NWLR (Pt 323) 639 is a significant decision of the Supreme Court of Nigeria which addresses fundamental principles of contract law. Specifically, the case provides a clear illustration of the rules surrounding the formation of a contract, focusing on the distinction between an internal decision to accept an offer and the legally required external communication of that acceptance. This summary will outline the facts of the case, identify the central legal issue that was brought before the court, and explain the court's final decision and the reasoning behind it.
The Facts of the Case
The dispute arose from a construction procurement process. The respondent, the Council of Obafemi Awolowo University (OAU), published an advertisement inviting tenders for the construction of a new building on its campus. In response to this invitation, the appellant, Adecentro (Nig) Ltd, a construction company, submitted a formal bid, or tender, for the project.
The bids were reviewed by the university's Tenders Board, which subsequently recommended that the contract should be awarded to the appellant. Acting on this recommendation, the University Council, which was the body with the authority to award such contracts, met and passed a resolution to award the building contract to Adecentro (Nig) Ltd.
However, before this decision was formally or informally communicated to the appellant, the University Council convened another meeting. At this subsequent meeting, the Council decided to reverse its earlier decision. It passed a new resolution rescinding the award to the appellant and instead awarded the contract to a different construction company. Upon learning of these events, the appellant claimed that a binding contract had been formed when the Council passed its initial resolution. Consequently, they brought an action against the university, alleging a breach of contract and seeking damages. The appellant’s argument was that the Council’s first resolution was a valid acceptance of their offer (the tender), thereby creating a legally enforceable agreement.
The Legal Issue Before the Court
The central legal question that the Supreme Court had to resolve was straightforward but crucial to the law of contract. The issue was:
Did a binding and enforceable contract come into existence between the appellant and the respondent at the moment the respondent's Council passed its internal resolution to award the contract, even though that resolution was never communicated to the appellant before it was rescinded?
The Decision of the Supreme Court
The Supreme Court unanimously dismissed the appeal, holding that no contract had been formed between the parties. The court affirmed the position that an acceptance of an offer is not legally effective until it has been communicated to the person who made the offer (the offeror).
In its reasoning, the court broke down the contractual process. It established that the university's advertisement was an "invitation to treat," which is a request for offers, not an offer itself. The tender submitted by Adecentro (Nig) Ltd was therefore the offer. For a contract to be formed, this offer had to be accepted by the university. The main point of contention was whether the Council's internal resolution constituted such acceptance.
The Supreme Court held that the resolution was merely evidence of the Council's state of mind or intention to accept; it was not the acceptance itself in the eyes of the law. As stated by the court, acceptance requires an external manifestation of assent, not just a "mere mental assent" (Olawoyin, 2013). Until the decision to accept was communicated to Adecentro (Nig) Ltd, it remained an internal matter for the university. Since the acceptance had not been communicated, the university was within its rights to reconsider its position and revoke the internal decision. As the resolution to award the contract was rescinded before any notification had reached the appellant, there was no communicated acceptance, and therefore no binding contract to breach.
Conclusion
The decision in Adecentro v OAU reinforces a foundational principle of the Nigerian law of contract: acceptance must be communicated. The case clearly distinguishes between the internal corporate or administrative decision-making process of an organisation and the external act of communication required to create legal relations. It confirms that an offeror is not bound by an uncommunicated decision to accept their offer, allowing the offeree to have a change of mind up until the moment of communication. The case remains a key authority for students and practitioners on the mechanics of contract formation in Nigeria.
References
Adecentro (Nig) Ltd v Council of Obafemi Awolowo University [1994] 1 NWLR (Pt 323) 639.
Olawoyin, G.A. (2013) Nigerian Law of Contract. 2nd edn. Ibadan University Press.
