Effective Contract Management

Contract management, sometimes referred to as contract administration, refers to the processes and procedures that companies may implement in order to manage the negotiation, execution, performance, modification and termination of contracts with various parties including customers, vendors, distributors, contractors and employees. While businesspeople often dismiss contract preparation as “lawyer’s work” that has little or nothing to do with the important aspects of the working relationship between the contractual parties, contracting is actually one of the crucial activities in determining the success of any business arrangement.

We assume that one of your roles as in-house counsel will be assisting your internal clients with contract preparations and it is absolutely essential that you work closely with your clients to establish well in advance your mutual expectations regarding the role that you will be expected to play in the negotiation, drafting, finalization and monitoring of a particular contract. In most cases, you should expect to be responsible for drafting the contract and all related documents as well as spotting and resolving specific legal issues. Managers inside your company will typically be responsible for identifying and resolving all of the business and risk management issues associated with the contract and the underlying relationship between the parties. However, in-house counsel do sometimes become heavily involved in negotiation of business issues and to have a great deal of input into the strategy goals and objectives of a particular contractual arrangement.

For each proposed contractual arrangement you should get in the habit of going through a checklist of the actions that you might be expect to take in order to assist the company. You’ll eventually develop your own checklist that you can refer to as time goes by; however, when you are first starting out we recommend that you consider each of the following “Top 10 Steps for Effective Contract Management”:

  1. Make sure that you begin with a thorough investigation of both the business and legal background for the contract and the proposed transaction and business relationship in which the contract is to be used. Appropriate representatives of the company should be interviewed to determine how the relationship has evolved and what, if any, commitments may have already been made by the parties. This is also the time to give special consideration to the actual and potential impact on the company’s existing obligations and business relationships.
  2. Working with the appropriate representatives of the company, you should identify the steps that need to be taken in order to comply with the requirements of any contract review and signature authority policies and procedures that have been established by the company. For example, does the contract need to be reviewed and approved by senior management and/or the board of directors and, if so, what needs to be done in order to expedite review and consideration.
  3. Once you have a good understanding the scope of the proposed business relationship you should identify the contracts and related documents required to document the relationship and complete any immediate transaction and then proceed with collecting and reviewing examples of the necessary contracts to expedite the drafting process and isolate specific questions that the company will need to answer in order for the contract to be complete and accurate.
  4. If warranted by the complexity of the proposed transaction, you should prepare a time and responsibility schedule for drafting, review, discussion, revision and completion of all required items and activities. For example, a time and responsibility schedule is often useful for a financing transaction that must pass through several stages over an extended period of time including preparation of a business plan, presentations to potential capital providers, preparation of financing documents and satisfaction of closing conditions.
  5. Taking into account discussions with company representatives regarding your role, you should participate in the negotiation of the essential terms of each contract and, if appropriate and useful, prepare a term sheet or letter of understanding to be sure that the parties are in agreement regarding the essential terms before time and effort is spent on contract preparation. If you are not to be directly involved in negotiations you should, at a minimum, provide company representatives with a list of questions that will need to be answered in order for the contracts to be completed so that the representatives can discuss them with their counterparts from the opposite party.
  6. Once background information has been collected and preliminary agreement has been reached on the essential terms, you should prepare the initial draft of each of the required contracts and related documents or, in cases where the opposite party is responsible for drafting, review the initial draft of such items prepared by the opposite party; discuss and negotiate necessary changes in the initial drafts and make sure that revised drafts are circulated for review and finalization. The timing of the drafting and revision process is crucial since delays can push the relationship off track and jeopardize realization of the business opportunities anticipated by both parties.
  7. Once the documentation is finalized you should prepare for the closing of the transaction, including pre-closing meetings and preparation of closing checklists and memoranda. If certificates and/or consents from outside parties are required in order for the contracts to be finalized and become effective they must be planned for well in advance and may themselves require time-consuming negotiations.
  8. Once all conditions to consummation of the proposed business relationship have been satisfied or waived, you should oversee completion of the closing of the transaction at which time all contracts and related documents are executed and exchanged and any required performance at the closing (e.g., cash payments) is completed.
  9. Once the closing is completed you should make sure that all of the closing documents are organized and that copies are delivered to all interested parties. This is also the time for you to make sure that the files relating to the transaction that have been opened during the process described above are organized so that they can be easily accessed in the future should questions arise.
  10. Working with company representatives, you should establish a plan for ongoing review of the performance of each of the parties under the terms of the contract, at least in those cases where the contract is long-term and calls for continuous performance over an extended period of time. As part of the plan you should calendar any dates identified in the contracts that may require follow up action, such as performance milestones and option elections.

We cannot overemphasize the importance of determining your role in the contracting process and the level of active involvement that you may have in negotiations relating to the contract. In-house counsel’s role can vary from active negotiator to behind-the-scenes scrivener. In all situations where you are empowered to take some actions without managers being present, you should make sure that procedures are in place to promptly communicate any new development to the appropriate businesspersons within the company. Absent this type of communication, and a clear delineation of responsibility between you and other company participants, you may find that responsible managers within the company are unhappy with the way the company is being represented. Moreover, lack of coordination increases the risk of embarrassing conflicts and misunderstanding that send the wrong message to the parties on the other side of the transaction.

Even if you are not expected to play a primary role in negotiating the terms of the contract, you should make every effort to encourage managers to notify you as soon as possible that the transaction is contemplated. While businesspersons do not always do the best job of informing their lawyers in advance, even in the best of circumstances, you should always attempt to sensitize managers and other involved parties within the company to the possibility that unforeseen legal issues may emerge from a particular business decision. With that knowledge and understanding, businesspersons can be trained to always discuss business points with the caveat that a final decision will ultimately depend on review by “legal”. This Top Ten helps in-house counsel define the important considerations in the contract management process, regardless of their role.

Culled from Association of Corporate Counsel

 

Advertisements

Digitalisation, automation and the global labour market

courses-postgraduate-public_health-occupational_health_safety_environmental_management

Introduction

Modern information technology and the daily use of the Internet have strongly influenced the world of work in the 21st century. Intelligent algorithms simplify everyday tasks, and it is impossible to imagine how most steps of a procedure could be managed without them. Further, the use of artificial intelligence (AI) and robotics is accelerating. Thus, the question arises as to what the future world of work will look like and how long it will take for this to happen. Mass unemployment, mass poverty and social distortion may be a possible scenario for the new world of work.(1) Even if intelligent systems and algorithms play an increasingly central role in the new world of work, no jobs will be lost abruptly as a consequence of digitalisation. Rather, a gradual transition will take place, which has already commenced and differs from industry to industry and from company to company.(2)

Big data analyses and intelligent algorithms are also increasingly replacing or supporting humans in the service sector. In the industry sector, automation and the use of production robots will lead to considerable savings with regard to the cost of labour and can release workers from hard and dangerous, repetitive and monotonous work. While in the European automotive industry one working hour in production costs more than €40, the costs for using a robot range from €5 to €8 an hour.(3) A production robot is thus only slightly cheaper than a worker in China.(4)

Robots and intelligent algorithms cannot become ill, have children or go on strike, and are not entitled to annual leave; therefore, for many companies it is worthwhile investing in robots and intelligent software. An autonomous system does not depend on external factors and works reliably and constantly; it can also work in danger zones and overnight.(5)

Categories of AI

The following definitions are of use in this area:

  • Deep learning – machine learning based on a set of algorithms that attempt to model high-level abstractions in data.
  • Gig economy – independent contractors looking for individual tasks that companies advertise on an online platform (eg, Amazon Mechanical Turk).
  • Robotisation – production robots replacing employees because of advanced technology (they work more precisely than humans, eg, three-dimensional printers).
  • Autonomous driving – vehicles have the power for self-governance using sensors and navigation without human input. Taxi and truck drivers are no longer necessary. The same applies to stock managers and postal carriers (eg, delivery drones).
  • Dematerialisation – thanks to automatic data recording and data processing, traditional office activities are no longer necessary (eg, accounting or lawyer assistants).

Impact of digitalisation and automation on labour market

Global view
According to recent studies, about 47% of total US employment is at risk,(6) while around 70% of total employment in Thailand or India is at risk.(7) Low-wage countries such as China, India and Bangladesh are still benefiting from their surplus of low-skilled workers, and western companies have outsourced their production and some services to these countries. In most developing countries, the implementation of (partly) autonomous systems is unlikely to be worthwhile at present for economic reasons, since the labour costs are not much higher than the costs for acquisition, development and maintenance of the necessary equipment.(8) On the other hand, companies also located in low-wage countries must invest in relevant IT systems in order to improve their productivity and attractiveness and remain competitive in the long run.

Eventually, however, these companies will decide to produce in their countries of origin using production robots and only a few workers. In this case, the surplus of low-skilled workers will turn into a curse for developing countries. The question is how to integrate the large number of unskilled production workers into a structurally difficult labour market that depends on the demand of foreign countries. Another problem is that there are no comparable social security systems in place in most developing countries. Possible mass unemployment could lead to humanitarian catastrophes and a wave of migration.

Due to the lack of financial investments in many developing countries, digitalisation will initially be strongly focused on developed countries and Southeast Asia. For example, more than 80% of the robots sold each year are used in Japan, South Korea, the United States and Germany.(9)

New job structures
According to a survey by the Pew Research Centre, 65% of Americans expect that a robot or an intelligent algorithm will be doing their job within 50 years.(10) Individual jobs will disappear partly or completely, and new types of job will come into being, especially in the service sector. That the service sector will be affected can particularly be seen in the insurance and financial branches, where intelligent algorithms are replacing human employees by automatically carrying out traditional back-office tasks, answering client questions via chatbots and presenting financial planning or insurance policies.(11)

A typical example of a new type of job created in recent years is crowdworking. Freelancers represent the typical worker of ‘Industry 4.0’ because they work at any time and in any place. Thanks to the Internet, international borders and time differences also no longer play a role. Owing to the digitalisation and internationalisation of the online platforms on which crowdworkers offer their services, the choice of applicable law is usually uncertain. More precisely, the challenges are how to define ‘crowdworking’, how to establish working conditions for compensation and how to determine which tax regime, social security and welfare rules apply.(12)

It is certain that both blue and white collar sectors will be affected to the same extent. In the medium-wage sector, routine jobs will be eliminated. Up to one-third of the jobs that require a bachelor’s degree may be replaced by a machine or intelligent software in the coming years. At the same time, it is expected that new jobs will be created in the service sector, ranging from data analysts to software programmers.

Labour relations
The role of humans within the world of work is changing. Employee organisations have realised that new challenges are in store for employees from all professional and social classes because of robotics and the computerisation of the workplace. Trade unions will pay particular attention that no ‘lost generation’ is left behind and that there are no mass dismissals caused by the introduction of AI. Unions will advocate further training, advanced training and retraining of employees.(13)

Trade unions will remain the main player when it comes to fighting for employees’ rights and they will expand their constituency by also representing the increasing number of freelancers. Finally, legislators will have to introduce new forms of employee representation structures to avoid their slow decline caused by a decrease in trade union memberships and fewer employees in a company, due to which the required thresholds for works councils can no longer be reached.

Outsourcing employment and creating new internal structures
Companies will focus on their core competencies and will outsource other activities in a cost-effective manner.(14) It is a global trend that ‘Work 4.0’ will take place outside traditional employment structures, with a rise in self-employment.(15) Even in European countries, the so-called platform economy is becoming more and more common. And larger companies use external workers instead of hiring new employees. Some highly qualified young employees enjoy their independence and will focus their work on the development of creative solutions for a changing client base. The demand for social security is no longer as high, but freedom with regard to working time, the place of work and the choice of clients is more important to so-called ‘Generation Y’.

Professional connections between companies, clients, competitors and external providers involve some risks with regard to business secrets, especially if companies create open innovation models or use ‘prosumers’ (who consume and produce media) to develop their products. Particularly in big companies, hierarchy levels will be eliminated and smaller organisational units will be necessary. An automatic supply chain connection between the company’s systems and the systems of its external providers will be the basis for success in the digital world.

Distinction between employee and independent contractor
Classic employment can be detrimental to the business owing to the high wage costs in European countries.(16) An employee is primarily characterised by the fact that he or she is subject to the authority of the employer to issue instructions regarding the job assignment. The borders between the employee’s professional life and private life become blurred. If the place of work, in addition to working time, becomes more flexible, and if employees are granted more powers to work independently, it becomes harder to distinguish between an employee and an external freelance worker or a worker provided by a third-party company.(17)

Liability and safety risks
The introduction of intelligent algorithms and more independent production robots will create new risks for employees and employers. At the moment, a spatial separation between robotic and human workers characterises production facilities. In the future world of work, human workers will have to collaborate with robots and intelligent algorithms. Work will be characterised by the use of connected technical wearables (eg, data glasses or fitness trackers). In the production sector, risk analyses will be carried out in advance.

In addition, software faults can come into consideration as potential safety hazards relating to autonomous systems and assistant robots. Recently, the European Parliament voted for a resolution concerning the introduction of legal standards for robots and intelligent algorithms (eg, electronic person) and compulsory insurance to compensate for damages caused by the systems.(18)

Self-employed contractors are not released from liability. If an independent contractor destroys the principal’s property while working for the principal, he or she must pay full damages, whereas the employee’s liability is limited in most cases.

Working time
In the future, employees and employers will agree on the flexible management of working hours. The breakdown of the boundaries for working hours also makes it possible to implement working life time models that are beneficial to the ‘work-life balance’. In most European countries, the maximum working hours or rest periods are exceeded in everyday practice. National and European lawmakers should create frameworks offering more flexibility and less strict regulations to avoid this legal uncertainty (eg, daily rest periods).

Some (older) alternative working-time models will become common, especially for the younger generation. Examples are home office, job sharing, on-call work, zero-hour contracts, employee-sharing, sabbaticals or reduced working time models for older employees. However, there are individual legal risks concerning the contractual design of every alternative working time model. In most cases, negotiations with employee representatives will be necessary.

Remuneration
The breakdown of boundaries in terms of the place of work and working hours makes it difficult for employers to check how many hours employees have actually worked. There is no factor linking the time/wage system, which makes this system unattractive for employees and employers alike since, in general, employees’ motivation is enhanced by more performance-related payments. In the future, elements of performance-linked payment – or alternatives such as stock options, annual bonuses or company pensions – will thus be used increasingly with regard to non-executive employees.

The central issue regarding performance-related remuneration structures is not the type of agreement, but how to define ‘performance-related’. A combination of an individual team target (turnover or a ‘soft’ target) and the turnover achieved by the company or group is possible.

Data privacy and big data
For big data analyses, data is anonymised and exists in an unstructured form. Thus, in most countries big data analyses do not violate applicable law. For companies, data is not only an asset worth protecting, but at the same time it is merchandise, and has been called the “oil of the future”.(19)Nevertheless, the EU General Data Protection Regulation (applicable as of May 2018) prohibits collecting personal data without a permissive rule in all European countries. US data privacy protection laws are not based on the general assumption that data is confidential, but provide for data confidentiality in individual cases (eg, with regard to health insurance and the protection of minors). In addition, at least in the European Union, the introduction of many technical aids (eg, production robots, wearables, intelligent algorithms and employees’ own devices) is not possible without the consent of employee representatives.

Comment

One certainty is that both blue and white collar sectors will be affected to the same degree.(20) A high level of unemployment in some sectors will be unavoidable, even if the major share of jobs will shift to a different area of work – mainly to the service sector, where new service models will be created. Finally, AI will result in growth and prosperity: employees will also benefit from flexible solutions concerning working time and the place of work caused by the introduction of AI.

The digitalisation (and automation) of services is a global phenomenon affecting a far-reaching and diversified field of advisory services in general, and labour and employment law in particular. Ideally, future laws should take the technological developments and the increased need for flexibility into account. AI is creating a gap between existing legislation and the new laws necessary for an emerging workplace reality.(21)

For further information on this topic please contact Gerlind Wisskirchen or Jan Schwindling at CMS Hasche Sigle by telephone (+49 40 37 63 00) or email (gerlind.wisskirchen@cms-hs.com or jan.schwindling@cms-hs.com). The CMS Hasche Sigle website can be accessed at www.cms-hs.com.

Endnotes

(1) www.spiegel.de/wirtschaft/soziales/arbeitsmarkt-der-zukunft-die-jobfresser-kommen-a-1105032.html.

(2) Brzeski/Burk, “Die Roboter kommen, Folgen der Automatisierung für den deutschen Arbeitsmarkt“, 2015.

(3) www.bcgperspectives.com/content/articles/lean-manufacturing-innovation-robots-redefine-competitiveness/.

(4) “Kollege Roboter,” Fokus No 38/2015 of October 19 2015, p69.

(5) www.faz.net/aktuell/wirtschaft/fuehrung-und-digitalisierung-mein-chef-der-roboter-14165244.html.

(6) Frey/Osborne, The Future of Employment: How Susceptible Are Jobs to Computerisation,” 2013, p1.

(7) “Automat trifft Armut”, Handelsblatt News am Abend, July 15; No 135, p6.

(8) www.bcgperspectives.com/content/articles/lean-manufacturing-innovation-robots-redefine-competitiveness/.

(9) www.bcgperspectives.com/content/articles/lean-manufacturing-innovation-robots-redefine-competitiveness/.

(10) www.pewinternet.org/2016/03/10/public-predictions-for-the-future-of-workforce-automation/ p3.

(11) www3.asiainsurancereview.com/News/View-NewsLetter-Article/id/38286/Type/eDaily/South-Korea-Insurers-to-evolve-into-integrated-service-providers-integrated-service-providers.

(12) “The On-Demand Economy and the impact on employment law”, International Bar Association Employment & Industrial Relations Law, September 2016, p31.

(13) https://innovation-gute-arbeit.verdi.de/++file++540998f5ba949b358400004e/download/138.1411_digit_arbeit_RZ3_web.pdf S.25.

(14) “Understanding the Future of Work“, International Organisation of Employers Brief, July 6 2016, p7.

(15) “Automation and Independent Work in a Digital Economy”, OECD Policy Brief on the Future of Work, May 2016, p3.

(16) “The On-Demand Economy and the impact on employment law”, International Bar Association Employment & Industrial Relations Law, September 2016, p27.

(17) “The On-Demand Economy and the impact on employment law”, International Bar Association Employment & Industrial Relations Law, September 2016, p26.

(18) www.spiegel.de/netzwelt/netzpolitik/kuenstliche-intelligenz-eu-parlament-fordert-regeln-fuer-roboter-technologie-a-1134949.html.

(19) www.faz.net/aktuell/wirtschaft/netzwirtschaft/was-taugt-die-eu-datenschutz-verordnung-13972055.htm.

(20) www.pewinternet.org/2016/03/10/public-predictions-for-the-future-of-workforce-automation/ p5.

Source: International Law Office

Industrial Disputes: National Industrial Court No More A Final Court

Industrial disputes dates as far back as early 19th century. In the Mid-19thcentury, a small craft group in America had already organised themselves and formed The National Labour Union, which was established in 1866 through the help of Williams H. Sylvis, and between1880–1990 there were close to 25,000 Strikes involving more than 6 million workers. The gravel of these agitations was deeply rooted in seeing to the improvement of workers welfare and working conditions which were largely neglected by their employers.

The case of Holden v Hardy.169 US 366 (1898) is very insightful on this. The Supreme Court of US, while upholding the reasonable working hours held thus; “The legislature has also recognized the fact, which the experience of legislators in many states has corroborated, that the proprietors of these establishments and their operatives do not stand upon an equality, and that their interests are, to a certain extent, conflicting. The former naturally desire to obtain as much labor as possible from their employees, while the latter are often induced by the fear of discharge to conform to regulations which their judgment, fairly exercised, would pronounce to be detrimental to their health or strength. Today, there are better working conditions for workers, which are universally measured with the yard stick of “Fair labour practise or international best practises in labour” and of course Nigeria is a signatory to the well celebrated International Labour Organisation (I.L.O).

To reduce industrial conflicts, there is need to have an effective and efficient adjudicatory body that will ensure speedy dispensation of labour related disputes. These immediate forgoing formed the view upon which National Industrial Court Act was enacted and the subsequent Alteration of the 1999 Constitution of Federal Republic of Nigeria which clothed the National Industrial Courts (NIC) with the status of a superior court of record and thus, placed its jurisdiction out of reach of other coordinate courts, and to an extent, the appellant court.

The special consideration and privilege given to the NIC by the Constitution caused serious confusion amongst legal practitioners as to the finality or otherwise of the court’s decision. Save for Fundamental Human Right and Criminal matters, whether the decisions of the NIC is appealable. Perhaps, this seeming confusion arose from the wordings of section 254(C) of the Constitution which provides thus:

“(5) The National Industrial Court shall have and exercise jurisdiction and powers in criminal causes and matters arising from any cause or matter of which jurisdiction is conferred on the National Industrial Court by the section or any other Act of the National Assembly or any other law.

(6) Notwithstanding anything contrary in this constitution, appeal shall lie from the decision of the National Industrial Court from matters in sub-section 5 of this constitution to the court of appeal as of right.”

In a bid to resolve this dilemma, arose two of conflicting decisions of the Court of Appeal. The first is the decision of the Court of Appeal in Ekiti division in the case of Ekiti State v Mr. M.K Bamisaye (2013) L.P.E.L.R 20407 (CA) where the Court held that nothing in the Constitution makes National Industrial Court a court of finality. The second is the decision of Court of Appeal Lagos division in the case of Lagos Sharaton Hotel &Towers v Hotel and Personal Services Senior Staff Association (2014) 9 CLRN Pg. 61 wherein the court refused to grant leave to appeal a decision of the National Industrial Court, because only matters on Fundamental Human Right and Criminal matters are appealable. Obviously, these two decisions totally complicated the matter.

In the face of this confusion, the court of appeal Lagos division referred to the Supreme Court in 2014 to resolve this conflict. In the Supreme decision delivered on 7/7/2017, in Skye Bank Nigeria Plc v Victor Anaemem Iwu in Suit No SC/885/2014, the court held that the decisions of NIC are appealable to the Court of appeal, as Court of appeal has exclusive jurisdiction, to the exclusion of any other court in Nigeria to hear and determine all appeals arising from the decisions of National Industrial Court; as the right of appeal against the decisions of NIC has not been expressly limited by the constitution.

Whilst the writer commends the decision of the Supreme Court in this regard in many respects; what are your thoughts?

About the Author: Ikechukwu Nwakanma is a Junior Associate at Perchstone & Graeys, a leading commercial law firm in Nigeria, with especial competence in Energy & Infrastructure, Banking & Finance, Dispute Resolution and Corporate & Commercial Law.

http://wp.me/p2j4jd-Ll

Disclosed Principal is Solely Liable for its Agent’s Authorised Actions

OYETUBO JOKOTADE ESTATE RESOURCES LIMITED & 2 ORS v. CREEK ENERGY LIMITED & ANOR

COURT OF APPEAL LAGOS DIVISION

(SANKEY; OTISI; EKANEM, JJ.CA)

In 2006, the 2nd respondent entered into an agreement for sale of land with the 1st appellant through its agent – the 2nd appellant – and the 3rd appellant who was the managing director of the 2nd appellant at the material time. The sale agreement was for two plots of land located at Sangotedo, Eti Osa Local Government Area of Lagos State. The 2nd respondent made payments for the two plots of land on behalf of two limited liability companies, namely, Seamore Travels & Tours Limited, and Creek Energy Limited –, the 1st respondent. As Part of its agency services, the 2nd respondent was to carry out development of infrastructure of the estate where the plots of land in controversy are situated. At the time of contract, the entire estate was without any infrastructure and the total amount to be paid by the purchasers for infrastructure development was not ascertained, but was agreed upon by all the purchasers to make payment in installments for infrastructure development of the estate at an amount to be determined by the 2nd appellant. Consequently, all the stakeholders met and agreed that a particular sum will be paid for infrastructure development of the estate which was prorated and determined by the size of land purchased.

The respondent made payments in installments to the 2nd appellant for a while, but later stopped further payments in violation of the sale agreement. The appellants sent a letter of demand to the respondents through their solicitors urging them to make payments and giving them a 30-day ultimatum. The appellants further stated in their letter to the respondents that failure to comply will be deemed as disinterest in continuation of the scheme and that one of the plots of land will be put up for sale and the money realized used to defray the infrastructure development levy of the other plot of land. In response, the respondents, through their solicitors, wrote a letter to the appellants and demanded a refund of all monies paid within two weeks. The respondent did not take further steps in the matter until three years later when it instituted a claim at the High Court of Lagos State claiming inter alia, a declaration that the sale agreement between the parties in respect of one of the plots of land is valid, enforceable, subsisting and an order of specific performance against the appellants.

At the end of trial, the trial judge dismissed the claims of the respondents but ordered a refund of all the monies paid by the respondents to the appellants totaling N5,090,200 (Five Million, Ninety Thousand Two Hundred Naira) and also awarded N100, 000. 00 (One Hundred Thousand Naira) in favour of the respondents being, costs of the action. The appellants were aggrieved and filed a notice of appeal at the Court of Appeal, Lagos Division urging it to reverse the trial court.

One of the issues raised was whether the 3rd appellant, being an agent of the 2nd appellant, was personally liable to the respondents in the circumstances of the case.

Arguing the issue, counsel for the appellants submitted that the 3rd appellant was the managing director of the 2nd appellant who acted in that capacity. The 3rd appellant was acting for a disclosed principal within his scope of authority and as such his lawful act is an act of the company itself. Learned counsel relied on the cases of Econet Wireless (Nig.) Ltd v. Econet Wireless Ltd, Leventis Technical Ltd v. Petro Jessica Ent. Ltd and Niger Progress Ltd v. NEC Corporation to submit that where a party is an agent of a disclosed principal, the correct party to sue is the said principal, as the agent would not incur personal liability. Although, the 3rd appellant played a crucial role in the transaction between the parties, he was not personally liable for any damages to the respondents. Counsel urged the court to resolve the issue in favour of the appellants.

In responding to the argument of the appellants’ counsel, learned counsel for the respondent submitted that the trial court was right to have held that the 3rd appellant was liable to be joined as a necessary party in the suit since he would be bound by the outcome of the court’s decision. Counsel further submitted that given the circumstances of the case and evidence before the court, it was necessary for the veil of incorporation to be lifted in order to unravel the position and acts of the 3rd appellant in order to do justice in the matter. Counsel urged the court to disregard the argument of the appellants and resolve the issue in favour of the respondents.

Resolving the issue, the court held thus:

The established position of the law is that an agent of a disclosed principal acting within the scope of his authority, is ordinarily not personally liable on a contract he enters on behalf of the said principal; Okafor v. Ezenwa (2002) 13 NWLR (Pt. 784) 319; Osigwe v. PSPLS Management Consortium Ltd (2009) 3 NWLR (Pt. 1128) 378; The proper person to sue or be sued upon a contract entered into by such an agent acting within the scope of his authority is his principal; Osigwe v. PSPLS Management Consortium Ltd (supra).

Issue resolved in favour of the appellants.

R.A. Aladesanmi, Esq., with A. Deniran, Esq.; C.C. Anyarah (Ms.) for the Appellants.
Fred Onuobia, Esq. with J. Okezie, Esq. for the Respondents.

This summary is fully reported at (2017) 7 CLRN
www.clrndirect.com
info@clrndirect.com

Malicious publication: Court awards N50b damages against Stanbic IBTC – PM NEWS Nigeria

By Akin Kuponiyi

Justice Candide-Johnson presiding over a Lagos High Court, south west Nigeria,has ordered Stanbic-IBTC bank Plc and CRC Credit Bureau limited to jointly pay the sum of N50 billion as general damages, to one of its customers, Longterm Global Capital Limited, for false, malicious and injurious publication of falsehoods against it.

Apart from the judgement sum, the judge also ordered the bank and CRC Credit Bureau Ltd that is a joint defendant in the suit filed by Longterm Global Capital Limited, to publish forthwith and not less than seven days, a retraction and apology to the claimant in the cover pages of Sunday and Monday editions of the Punch, Thisday and Guardian newspapers, in respect of the alleged false indebtedness publication of the claimant to the bank.

Justice Candide-Johnson also directed CRC Credit Bureau Limited, to immediately delete from its electronically published data bank and all other publications, all references to the alleged indebtedness of the bank’s customer to the bank.

The judge further made an order of perpetual injunction restraining Stanbic-IBTC Bank PLC and CRC Credit Bureau Limited, from further publishing any other materials or details relating to the alleged indebtedness of the claimant to the Stanbic-IBTC PLC

Finally, the court also ordered the payment of interest on the above judgement sum at the rate of 10 percent per annum from the date of judgement of the court until date of the final payment by the defendants in line with the provision of Order 35 Rule 4, of High Court of Lagos State (Civil Procedure) Rules, 2012.

The judgement of the court was sequel to a suit filed before the court by the Stock broking firm, Longterm Global Capital seeking a sum of N50 billion damages against Stanbic/IBTC Bank Limited, over an alleged breach of contract agreement, and malicious publication of non existing indebtedness.

The stock brokerage firm in its statement of claim filed before the court against Stanbic/IBTC and CRC Credit Bureau Limited, by its lawyer, Chief Felix O. Fagbohungbe (SAN), alleged thus: that on or about April 2, 2014, pursuant to the banker/customer relationship between it and the bank, it applied to Union Bank of Nigeria Plc, for a term loan of N250 million. The loan was for the purchase of a commercial property at Lekki Phase 1, Lagos, which would have been prime property it would have acquired and developed Into a multi-storey ultra modern apartment complex for sale to various property investors.

The claimant also averred that due to the urgent nature of the purpose of the loan application at the material time, its relevant officials made several follow-up visit Union Bank Plc, to inquire about the state of processing of it’s loan application. But to its greatest bewilderment, its officials were verbally informed by Union Bank Plc that credit status check were being conducted at relevant credit bureaus in respect of its loan transaction with other banks in the country. The bank later wrote a letter stating that it would be unable to grant the loan due to unfavorable credit report which was electronically published by the data bank of Credit Beareu Limited that is the second defendant in this suit to the whole world with the Central Bank of Nigeria’s directive.

The claimant further stated that by Union Bank Plc’s letter, it was informed that pursuant to the mandatory requirement of CBN directing that every bank and Financial institutions in the country must obtain credit status reports from at least two credit bureaux before granting any credit facility to their customers, the Union Bank Plc, applied for and obtained it’s credit status from the second defendant and Messrs Credit Registry Plc, as part of the processing it’s loan application.

It further stated in the report sent by Union Bank that it’s credit status with fisrt defendant was tagged ‘clean’, while report from the second defendant was said to be unsatisfactory and it became aware that the Stanbic IBTC bank had reported to the CRC Credit Bereau limited on or about October 31, 2012, that the bank deliberately, fasely and maliciously wrote and published a credit status report through the second defendant concerning it that it has been blacklisted by the StanbicIBTC as a loan defaulter and bad loan borrower who was owing the sum of N543,030.843 million, for 722 days running as at October 31, 2012, and which numbers of days was over and above the maturity date of December 31, 2009.

The claimant further aveered that Stanbic/IBTC stated that the interest outstanding on the loan as at December 31, 2012, stood at N213, 537, 753 million.

However, the claimant stated that contrary to the false, injurious and Malicious credit status reports published by the Stanbic/IBTC bank, through CRC Credit Bureau Limited, to the whole world including Union Bank Plc, there were no time that the StanbicIBTC granted it any credit facility which would be classified as ‘lost’ in respect of which account balance in the sum of N543,030.843 million, with the accrued interest in the sum of N213, 537, 753 million, or any other sum at all were outstanding against it.

It stated also that to the foregoing, Union Bank Plc relied on the defendants’ credit status information and declined granting it’s term loan which was required to purchase a commercial property.

It also stated that the plaintiff apart from not indebted to StanbicIBTC , it was neither informed by the Stanbic/IBTC that it was indebted nor was any demand made in that regard before the malicious falsehood was reported by Stanbic IBTC to CRC Credit Bureau which was subsequently published the false and untrue credit status reports to Union Bank of Nigeria PLC and the whole world.

It also stated that the credit status reports made to the second defendant by the first defendant in relation to the alleged indebtedness was made without just cause or excuse as there was never a time Stanbic IBTC granted it any credit facility which can be classified as ‘lost’ or’bad’ which it did not pledge adequate and readily realizable collateral security to cover the principal loan amount plus interest.

Consequently,due to the deliberate, malicious and/or injurious falsehood published by the defendants in relation to the credit status, it has been unable to access any credit facility from Union Bank of Nigeria PLC , and all other financial institutions in Nigeria, as it has been blacklisted and embargoed from accessing new credit.

The claimant also stated that the false, malicious and injurious falsehood of the defendants has adversely affected it’s business reputation, as all it’s bankers and Financial institutions are no longer able or permitted to grant any credit facility to argument it’s working capital for reason that it has been effectively blacklisted by been classified as a bad or delinquent borrower and consequently shut-out of Nigeria’s credit system.

The claimant also aveered that the malicious and injurious falsehood by the defendants was calculated embarrassed, de-market and cause huge pecuniary damage as a registered capital market institution, the main objective of the defendants in deliberately, willfully and intentionally published the malicious and injurious falsehood credit report, was to asphyxiated and paralyzed it’s investment activities and capital operation, and to untimely make its business collapsed without just cause.

Consequently, the claimant is urging the court to award it the sum of N50 billion as general damages against StanbicIBTC Bank and CRC Credit Beraeu jointly and severally. and the sum of N50 million as cost of instituting this suit.

It also seeks an order of the court directing the defendants to immediately delete from its electronically published data bank, and all other publications all references to the alleged indebtedness and an order directing the defendants to publish a retraction and or apology to it on the cover of Sunday or Monday edition of two national newspapers, in respect of the alleged indebtedness.

It also seeks an order of perpetual injunction restraining the defendants from further publishing any other materials or details relating to the alleged indebtedness.

However, Stanbic/IBTC in its statement of defence filed before the court denied all the claimant’s aveerment, thereby urging the court to dismiss the suit in its entirety with substantial cost in its favour.

In urging the court to dismiss the claimant’s suit, the bank averred that the claimant maintains an account with its Adetokunbo Ademola branch, and at all material time, the transaction on the said account were recorded electronically by it’s computer system. It added that between April 2008 and June 2011, the transactions were recorded in Account number 1111314381, under the Equinox Core Banking System, and between July 2011 and the time of instituting the suit, the transactions were recorded in Account number 9200689089, under Finacle Core Banking System.

It also stated that it did not author the credit status report cited by the claimant but merely provided the second defendant with the status of the Credit facility obtained by the claimant from it in discharge of it’s obligations under the guidelines for the Licensing, Operation and Regulations of Credit Bureau in Nigeria (CBN Licensing Guidelines).

It also aveered that the aforementioned information it provided to the second defendant was true and consistent with it’s records, and were not borne out of ill-will or malice and were not intended to disparage the claimant’s trade of business as alleged.

Stanbic/IBTC also stated that the claimant’s indebtedness arose as a result of a credit in the sum of N600 million, by virtue of letter of offer dated March 27, 2008 adding that the said indebtedness had been subject of litigation since December 23, 2009, in a suit marked FHC/L/CS/1491/09, Re; Longterm Global Capital Limited and Patrick Akinkotu vs. Stanbic/IBTC, Appeal No. CA/L/194/2011, Stanbic IBTC Vs. Longterm Global Capital and Patrick Akinkotu. And that a notice of appeal dated May 13, 2013, in respect of the matter has been filed at the Supreme Court of Nigeria on a motion on notice dated May 13, 2013.

It also stated that the said indebtedness had been acknowledged in the judgement by the Federal High Court in suit number FHC/L/CS/1491/09, Re; Longterm Global Capital Limited and Patrick Akinkotu vs. Stanbic/IBTC by Justice Achibong.

The bank also stated that the claimant’s Statement of Claim does not disclose a reasonable cause of action, and the action constituted a vexatious, frivolous and Malicious, consequently, the court lacks jurisdiction to entertain the suit.

Consequently, the bank urged the court to dismiss the suit in its entirety, and award substantial cost in it’s favour.

Source: Malicious publication: Court awards N50b damages against Stanbic IBTC – PM NEWS Nigeria

A garnishee is obligated to disclose the true state of the judgment debtor’s account

GUARANTY TRUST BANK PLC v. DR. (MRS.) ABIGAIL OGWEZZY-NDIKA

COURT OF APPEAL LAGOS DIVISION (GARBA; OTISI; EKANEM, JJ.CA)          

The respondent obtained judgment against a company named Plan Precision Limited and one Mr. Onyebuchi Okparaugo and commenced garnishee proceedings against the appellant to recover money standing to the credit of the judgment debtors. The appellant was served with the order nisi and filed an affidavit to show cause. In its affidavit, the appellant stated that only the 1st judgment debtor operated two accounts with it. Furthermore, the appellant stated that one of the accounts had a balance of N10, 559.88k (Ten Thousand Five Hundred and Fifty Nine Naira, Eighty Eight Kobo while the other account had a balance of N5, 798.15k (Five Thousand Seven Hundred and Ninety Eight Naira, Fifteen Kobo). The statements of account covered a period from February 1, 2015 to June 24, 2015 when the order nisi was served on the appellant. However, the entries in one of the statements of account indicated the last date of transaction to be May 28, 2015 while the other stated May 11, 2015.

The respondent filed a further and better affidavit alleging that the statements of account were incomplete as they only covered the period before the garnishee application was filed but failed to capture the period when the application was filed and when the matter eventually came up for hearing. The trial court after hearing the parties gave its ruling in favour of the respondent and the order nisi was made absolute against the appellant. The court relied on the allegation of the respondent and held that the statements of account were incomplete and that the appellant doctored them by deliberately failing to give the correct state of the accounts. The appellant was aggrieved and filed a notice of appeal at the Court of Appeal, Lagos Division challenging the ruling of the High Court of Lagos State.

One of the issues raised for determination was whether the learned trial court was right to have held that the statements of account exhibited by the appellant in its affidavit to show cause were doctored where there was no such allegation or evidence before the court.

Arguing the issue, learned counsel for the appellant stated that the learned trial judge did not give due consideration and appreciation to the statements filed by the appellant before coming to the conclusion that the statements of accounts were incomplete. It was further submitted that if the learned trial judge had taken into consideration the provisions of Section 87 of the Sheriffs and Civil Process Act or taken oral evidence with respect to any conflict in the affidavit evidence, the court would have been able to resolve the questions raised about the statements of account. Learned counsel submitted that the trial court was in error and urged the court to resolve the issue in favour of the appellant.

Responding to the argument of the appellant on the issue, learned counsel for the appellant contended that the appellants statements contained in the affidavits were clear and needed no further clarification. Counsel stated that even though the respondent timeously raised the issue of incompleteness of the statements of account, the appellant did nothing and gave no clarification. Counsel further argued that although the Appellant had deposed that the 2nd defendant did not maintain an account with it, one of the exhibits revealed that both defendants maintained accounts with the Appellant. Counsel submitted that in view of the contradictions and irregularities, the court was right to have disbelieved the appellant. Counsel relied on the case of Azubuike v. Diamond Bank Plc to submit that where there is material contradiction in the evidence of a party, whether oral or documentary, and it is on a material point, that party is not entitled to be believed. Counsel submitted that section 87 of the Sheriffs and Civil Process Act only applies to situations where liability is disputed by a garnishee and not where there is a partial admission by a garnishee as in this case. Counsel argued that the denial envisaged by Section 87 must be clear, unambiguous and unequivocal and that in this case no oral evidence was required to resolve the issue as the documentary evidence required no extraneous evidence for its interpretation. It was unnecessary to invoke the provisions of Section 87 of the Sheriffs and Civil Process Act. Counsel urged the court to discountenance the argument of the appellant and resolve the issue in favour of the respondent.

In resolving the issue, the court held thus:

Where the garnishee alleges that the judgment debtor has insufficient funds in his account with the garnishee to satisfy the judgment debt, the garnishee has a duty to disclose the true status of the account of the judgment debtor, by exhibiting the statement of account of the judgment debtor as at the date on which the order nisi was made. The simple reason for this, as given by this Court, per Mbaba, JCA in Oceanic Bank Plc v. Oladepo (supra) is thus:

“This is to enable the trial Court to form an independent opinion as to the ability of the Garnishee to satisfy the judgment debt, either in full or in part. Failure to disclose account detail of a judgment debtor by a garnishee (where insufficient money to  settle the debt is alleged) readily raises a presumption that the garnishee has something to hide, and that may be presumed against the garnishee, under – section 167(d) of the Evidence Act, 2011.”

If the garnishee challenges or disputes the attachment of the monies of the judgment debtor in his custody, a dispute deserving of further investigation by the trial Judge would have arisen as provided by Section 87 of the Sheriffs and Civil Process Act LPN 2004, as follows:

If the garnishee appears and disputes his liability the court, instead of making an order that execution shall issue, may order that any issue or question necessary for determining his liability be tried or determined in any manner in which any issue or question in any proceedings may be tried or determined, or may refer the matter to a referee. (Emphasis mine)

Issue is resolved in favour of the appellant.

Lekan Oni, Esq., for the Appellants
Lekan Ayinla, Esq. for the Respondent

This summary is fully reported at (2017) 7 CLRN

 

EFCC secures 137 convictions, recovers N419 billion, others in seven months

  • Commission invites senator over alleged bribery allegation against IGP
  • Group seeks sack of IGP over corruption charges

Acting Chairman of the Economic and Financial Crimes Commission (EFCC), Ibrahim Magu, yesterday disclosed that the commission recovered N419 billion and secured 137 convictions between January and August 2017.

Speaking at an interactive forum with journalists in Abuja, Magu said other cash haul within the period include £230,000.00, €610,000.00, $69.5million, 432,000.00 Dinars and 70,500 Saudi Riyad.

He appealed to the media not to relent in their support for the anti-corruption war, insisting that the corruption fight requires a concerted effort to succeed.

Magu also noted that it would be naive for anyone to expect that the fight against corruption will be smooth even as he called for unity among stakeholders to expose corrupt persons and all proceeds of corruption.

While expressing gratitude to the media for supporting the anti-graft crusade, Magu said: “The fight against corruption is getting tougher as corruption is continuously fighting back.

Magu also vowed to bring any EFCC operatives indicted for corruption to book and disclosed that nine cadet officers of the commission were recently discharged because they had issues with their certificates.

He promised to protect all whistle-blowers who provide information to the commission and maintained that it was declaring a total war against corruption.

Meanwhile, the Police Service Commission (PSC) has invited Chairman, Senate Committee on Navy, Isah Hamman Misau, to appear before its special panel investigating allegation of corruption in the Force on Wednesday, September 6, 2017.

A statement signed late Wednesday in Abuja by Head, Press and Public Relations, Ikechukwu Ani, said the Commission in a letter signed by the Chairman of the Special Panel, Justice O. Adekeye, a retired Justice of the Supreme Court, has invited Misau to appear before PSC panel.

“The Police Service Commission, the only organ saddled with the statutory responsibility of issuing letters of retirement to all police officers except the IGP has a vital role to play in determining the authenticity of this letter.”

“Senator Misau is invited to appear before the panel with the original copy of his letter of retirement for authentication,” the statement said.

In another development, the Progressive Mind for Development (PMDI), a civil society organisation, yesterday asked President Muhammadu Buhari to sack the Inspector-General of Police (IGP), Ibrahim Idris, over the recent corruption charges levelled against him by Misau.

The group said this would restore Nigerians’ hope in his anti-corruption war. President of the group, Abubakar Abdulsalam, in statement issued in Yola, Adamawa State, said that the anti-corruption war would be a shadow fight if the president fails to act decisively on the allegations against the IGP.

Source: The Guardian Nigeria