LEGAL PRINCIPLE: CONTRACT LAW — Formation of Contract — Conditions Precedent — Non-Fulfilment Precludes Existence of Binding Contract
PRINCIPLE STATEMENT
Where conditions precedent to the formation of a contract are not fulfilled, there is no meeting of the minds and no binding contract can exist.
RATIO DECIDENDI (SOURCE)
Per Achike, JSC, in Sparkling Breweries Limited & Ors v. Union Bank of Nigeria Limited (2001) NLC-1131996(SC) at pp. 27–28; Paras D–A.
"Where some of the conditions-precedent for the issuance of letters of credit were not performed, it was extremely difficult, in legal circle, to appreciate how one can either picture the existence of the alleged contract or objectively analyse the fancied contract between the parties in terms of 'offer' and 'acceptance.' Thus on appellants' admission that some conditions-precedent to the conclusion of a legally binding contract were yet to be complied with, it became certainly unarguable that there was no meeting of the minds between the parties that could lead to the conclusion that the parties were ad idem to the obligation on the issuance of a contract."
EXPLANATION / SCOPE
Conditions precedent must be fulfilled before a binding contract arises. If the parties agree that certain conditions must be met before a contract becomes binding, no contract exists until those conditions are satisfied. The failure to perform conditions precedent means there is no meeting of the minds. The court cannot enforce an agreement that was never finalised. The principle applies to both express and implied conditions. The parties are free to stipulate conditions. Until the conditions are met, either party may withdraw. The burden of proving fulfilment of conditions precedent is on the party asserting the contract. The rule prevents enforcement of incomplete or contingent agreements.