CONTRACT LAW — Breach of Contract — Bank’s Right to Withhold Investment — Express Contractual Term
Principle Statement
A bank was given a free hand under clause 35(n) to refuse to advance money should it find any critical matter affecting the future of the investment. Loss of confidence in a business proposal between parties, one being a bank, cannot be treated as trivial.
Ratio Decidendi (Source)
Per Oguntade, JSC, in Standard (Nig) Engineering Co Ltd & Anor v. Nigerian Bank for Commerce and Industry (2006) NLC-123-252-2001(SC) at pp. 34–35; Paras A–B.
"Clearly, the defendant was given a free hand under clause 35(n) of exhibit 'A' to refuse to advance money should it find any critical matter, which may in its view affect the future of the investment. It seems to me that the loss of confidence in a business proposal between the parties, one of whom was a bank cannot be treated as trivial."
Explanation / Scope
Contractual terms permitting withholding for critical matters give the bank discretion. The principle applies to contract law.
