DAMAGES — Breach of Contract — Contract Terminable on Notice — Measure of Damages
Ratio Decidendi
Per Tobi, JSC, adopting Fatayi-Williams, JSC in Mobil Oil (Nig) Ltd v. Akinfosile (1969) NMLR 217, in Adetoun Oladeji (Nig) Ltd v. Nigerian Breweries Plc (2007) NLC-123-91-2002(SC) at pp. 12–13; Paras D–E:
"Where there is a contract regulating any arrangement between the parties, the main duty of the court is to interpret that contract to give effect to the wishes of the parties as expressed in the contract document. … The only damages which with justification could be said to have arisen out of the peremptory termination of the Agreement is that resulting from failure to give one month's notice. In other words it is to be determined by what [the claimant] would have earned had he been given due notice."
Explanation / Scope
In contracts where the parties have expressly provided for termination upon notice, the terms of the contract govern the measure of damages for breach. If the contract is wrongfully terminated without the required notice, the innocent party is entitled to damages representing what they would have earned during the notice period. The claimant cannot claim damages for loss of the entire contract or future profits beyond the notice period, because the contract itself contemplated termination upon notice. The notice period represents the agreed duration of the parties’ commitment. This approach respects the parties’ contractual intentions and prevents a claimant from recovering more than they would have been entitled to if the contract had been properly terminated. The measure is simple: wages or profits for the notice period.