Legal and regulatory framework for courier and logistics operations in Nigeria (2)

Right of action

Another lacuna in the legislative framework applicable to courier companies is the question of who has a right of action in a dispatch contract. It is commonplace in the industry for dispatch contract to be entered into for the benefit of a third-party recipient, for example, a vendor who contracts a courier company to deliver purchased goods to the third-party purchaser.

The common law doctrine of privity of contract stipulates that a person who is not party to a contract is prevented from enforcing any term or right contained in such contract. This applies notwithstanding that the contract was made for the benefit of the person except in circumstances where the contract recognizes the right of such third party to benefits under the agreement or the Contracts (Right of Third Parties) Act 1999 of the UK is made applicable.

In the case of Ezex Courier Services Limited v. Charles Ugwu & Anor (2016) LCN/9028 (CA), where the 1st respondent (husband) and 2nd respondent (wife) jointly sued the appellant (courier company) for failing to deliver the 2nd respondent’s certificate in breach of the contractual agreement between the appellant and 1st respondent.

The Court of Appeal held that “…only persons to a contract can sue and be sued on it and generally a stranger to a contract can neither sue or be sued on it even if the contract is made for his benefit and purports to give him the right to sue or to make him liable upon it.”

We recommended that toing the line of other jurisdictions where there is a more elaborate regime including risk allocation, Nigeria amends the relevant laws to provide for a more comprehensive legal structure

Hence, the doctrine of privity of contract will operate to prevent an aggrieved customer who, for instance, ordered a dress from an Instagram vendor but received the dress from the courier company (dispatch rider) engaged to deliver the dress in a tattered form, from taking an action against the company or rider as it was not a party to the dispatch contract. The contractual claim lies with the vendor who directly engaged the courier company.

However, a right in torts (damages for trespass to property) inures in favour of the customer to sue the courier company for any such damage. The premise being that the courier company owes a duty of care to the customer, and a breach of that duty can be proven as well as damage occasioned by reason of the breach.

The court reiterating the principle of privity of contract as deeply entrenched in the Nigerian jurisprudence in the case of Rebold Industries Ltd. V. Mrs. Olubukola Magreola & Ors. (2015) LCN/4360 (SC) stated that “a person, who is not a party to a contract or deed, does not have a justifiable cause of action in contract”. It further stated that a plaintiff who has no privity of contract with the defendant will fail to establish a cause of action for breach of contract as he will simply not have a locus standi to sue the defendant on the contract.

Lessons from other jurisdictions

It is worthy to note that in the United Kingdom, the Contracts (Rights of Third-Party) Act 1999 allows third parties to enforce and benefit from contracts they were not part of provided that certain conditions are fulfilled such as where the contract expressly provides, the term of contract purports to confer a benefit and the third party is expressly identified in the contract by name, as a member of a class or answering a particular description, etc. This Act is inapplicable in Nigeria as a statute of general application having come in force in 1999 – post 1900.

Also, in India, United States of America, etc., jurisprudence exist to indicate that the principle of intended beneficiary and incidental beneficiary operate as exceptions to the doctrine of privity of contract.

Read also: Legal and regulatory framework for courier and logistics operations in Nigeria

Conclusion

This article has highlighted salient provisions of the legal regime for courier and logistics in Nigeria and the dearth of provisions in relation to risk allocation and right of action for a breach. We have also espoused the relevant principles of common law and the judicial jurisprudence on risk allocation and the right to maintain an action for breach of dispatch contracts which parties have resorted to in the face of the lack of a defined legal regime. We recommended that toing the line of other jurisdictions where there is a more elaborate regime including risk allocation, Nigeria amends the relevant laws to provide for a more comprehensive legal structure which adequately considers and contemplates diverse commercial and legal issues in order to keep up with emerging economic realities.

‘Debola is an Associate in the Mergers, Acquisitions and Private Equity practice of Olaniwun Ajayi LP where she advises individuals, indigenous and multinational entities on landmark corporate transactions.