What makes an agreement binding?

Sometimes, It’s Not What You Sign—It’s What You Do

1. DO YOU HAVE A CONTRACT?

A supplier starts deliveries. The buyer replies to emails, agrees on prices, and sets timelines. There is no signed contract. Both sides move forward.

Many Nigerian businesses operate this way, especially when speed matters. But questions follow. Has a contract been formed? Can either party walk away? Can one side rely on terms the other thought unsettled?

These situations unsettle businesses. One side may think there is a deal. The other may not. That gap often leads to expensive disputes.

This guide—the first in a new series on contract disputes—explains how Nigerian courts decide when a contract exists. It focuses on intention, conduct, and communication—not just documents.

Knowing where a contract begins helps business leaders avoid obligations they never intended or rights they cannot claim.

2. WHAT THE LAW LOOKS FOR

Courts focus on the evidence to determine if a contract exists, rather than the parties’ personal beliefs. The test is objective. The Court examines what was said, what was done, and whether those actions reflect agreement on key terms.

Five features typically signal a binding contract:

1. Offer – One party proposes specific terms, such as price, timelines, or deliverables.

2. Acceptance – The other agrees to those terms as they are. A reply that changes the terms may be treated as a new offer, not acceptance.

3. Consideration – Each side must give or promise something of value. That could be money, services, or a promise to act (or not act) in a certain way.

4. Intention – The deal must be more than a casual exchange. Both parties must act like they expect legal consequences if the agreement is broken.

5. Capacity – Each party must be legally allowed to enter into the agreement. Minors or people acting outside their authority might not qualify.

These elements can be found in writing, through conduct, or in spoken words. The law does not always require formalities. In most cases, an oral agreement or one formed through action is just as valid as a signed contract—so long as the essential terms are clear and both parties intend to be bound.

Courts may also consider what happens after the deal is said to have been made. Continued performance, for example, can show that both sides believed they were already committed.

The following decision tree gives a structured way to think through these requirements.

Quick Check: Do You Have a Binding Contract?

Use these questions to assess whether your arrangement might be legally enforceable:

1. Was there a clear offer?

One party proposed specific terms—such as price, services, or timelines.

2. Did the other side accept those terms?

Acceptance can be given through words or conduct. But if new terms were added, it may not count as acceptance.

3. Are the terms clear enough to enforce?

Vague promises or missing key details—like price or delivery timelines—may leave the Court with too little to work with.

4. Did both sides behave as though they intended a legal agreement?

Courts examine whether the actions suggest the parties treated the deal as binding.

5. Did each party give or promise something of value?

This could be money, goods, services, or anything else agreed upon as part of the deal.

If the answer to all five is “yes”, a binding contract may exist.

Caution: Even where all five questions are answered “yes”, a contract may still be void or unenforceable. This can happen if the subject of the agreement is illegal, goes against public policy, or is agreed under pressure or unfair influence.

3. IS THERE A CONTRACT WHEN SOME TERMS ARE MISSING?

Many deals begin with informal exchanges. A supplier expresses interest. The buyer is keen. Messages are exchanged. Someone starts work. Someone else promises to follow up. But key terms—price, scope, or timing—remain unsettled.

Have they made a binding agreement?

Courts look for clarity on essential terms. If the parties cannot agree on price, what is being provided, or when the contract starts, there may be no contract at all. These are not technicalities. They form the basis of any enforceable agreement. Without them, there is nothing to enforce.

That does not mean every missing detail will bring the deal down. The Court asks whether the missing term changes the core of the deal. If the uncertainty relates to price, quantity, or the service itself, the contract may not stand. However, the agreement might still hold if the gap can be filled by common business practice or later agreement.

This is where disputes often arise. One party believes they had a deal. The other says it was still under discussion.

Courts also pay close attention to conduct. Phrases like “subject to contract” may suggest the deal was not final. However, the Court will ask whether both parties behaved as if they had a deal.

That was a central issue in UBA v. Tejumola. The bank negotiated a 15-year lease with a property owner. They agreed on the rent and the space. The landlord made changes to the building at the bank’s request. But the start date was never settled. The documents were marked “subject to contract”. When the bank withdrew, the landlord sued. The Supreme Court found there was no lease. Without an agreed start date, there was no contract.

Compare this with Int. Textile v. Aderemi. There, too, the documents were marked “subject to contract”. But the parties had already started performing. Money changed hands. Possession was taken. The Court looked past the label and upheld the agreement.

These cases show the risk of moving ahead before the deal is settled. Businesses need to be confident that their agreements will hold. That confidence comes from clarity. If you want the Court to treat a deal as binding, ensure the essentials are settled.

Document all essential terms early to prevent misunderstandings and potential disputes. If the deal matters, do not leave key terms open. And do not act until the other side has done the same.

4. A CONTRACT MAY EXIST—EVEN WITHOUT A SIGNATURE

Many business owners assume no agreement exists if no one signs a contract. That is a risky belief.

Nigerian courts have clarified that a contract can exist even if it is unsigned. If both parties behave as if a deal is in place—by delivering goods, making payments, or meeting agreed terms—a court may treat that as a binding agreement.

There are three ways this typically happens:

• A spoken agreement followed by action.

• Repeated conduct that shows a shared understanding.

• A written document that one party signs, followed by both sides acting on it.

This was the situation in MTN v. C.C. Investment Ltd. MTN prepared and sent an agreement to a trade partner. The partner signed and returned it. MTN never signed but began acting on the terms—processing orders and payments. Later, MTN claimed the contract was invalid because it had not signed. The Court disagreed and found that MTN’s conduct showed that it accepted the deal. That was enough to create a binding contract.

The case highlights that if you begin performing under an agreement—accepting deliveries, making sales, issuing invoices—you may already be in a contract, even if no one has signed.

This has real consequences. You may lose legal protection if you later try to deny the deal. Equally, you may still have rights if the other side tries to back out unfairly.

If you do not intend to accept a contract, make that clear from the start. Silence or passive compliance can be costly.

5. CHANGING THE DEAL AFTER IT HAS BEGUN

Parties often try to adjust a contract after signing. A discussion over lunch. A follow-up call. A quiet agreement to tweak the terms. But if the original deal was written down, can these later exchanges carry legal weight?

As with many legal questions, it depends. Section 128 of the Evidence Act blocks oral evidence from altering the terms of a written agreement. If a contract is in writing, the Court will focus on that document. Not on what was said later.

There are narrow exceptions. One is where the new agreement deals with a separate issue not covered in the original terms. Another is where both sides clearly agree—after the fact—to change the contract. In either case, the party relying on the change must prove it.

Courts treat claims of verbal amendments with caution. The more critical the change, the stronger the evidence needs to be. In Access Bank v. NSITF, the bank argued that the parties later agreed to change how interest was calculated. The Court disagreed. The bank could not show any objective evidence of a new agreement. The decision shows that you cannot walk away from written terms without clear proof that both parties agreed to do so.

By contrast, the Court may accept that the contract has been varied when both sides act consistently with a new understanding—through emails, payment terms, or revised delivery schedules.

Verbal updates can cause trouble, especially where large sums or long-term obligations are involved. If something changes, record it. Without evidence, you will face an uphill task to hold the other party to a handshake.

6. QUESTIONS TO ASK BEFORE YOU ACT

Deals often move quickly. Sometimes the biggest risk lies not in what is signed, but in what is assumed. Before either side starts performing, it helps to pause and test the ground beneath your feet.

• Are we already behaving like the deal is done—sending goods, sharing data, making payments?

• Have we settled all the essential terms—price, timing, and responsibilities?

• Is there anything material that was agreed upon in a call or meeting but has not been recorded?

• Are we relying on “subject to contract” while carrying on as if the contract exists?

Nigerian courts will examine how parties act, not just what they say. If actions suggest the parties believed they had an agreement, a court may find one—regardless of pending drafts or missing signatures. That inconsistency can lead to costly surprises.

Asking the right questions early can prevent you from being locked into obligations you did not intend—or losing rights you thought you had.

In summary, while Nigerian law recognises contracts formed through conduct or verbal agreements, relying solely on informal arrangements can lead to legal uncertainties. To safeguard your business interests, always aim for clear, written contracts that outline all essential terms.

About the Authors

This guide was prepared by the Dispute Resolution team at Broderick Bozimo & Company. The team advises on contractual disputes, commercial litigation, and arbitration, drawing on decades of experience representing clients in high-stakes matters across Nigeria.

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