ASHAKACEM PLC V. ASHARATUL MUBASHSHURUN INVESTMENT LIMITED (2019)

Background

Asharatul Mubashshurun Investment Limited supplied Low Pour Fuel Oil (LPFO) to Ashakacem Plc under a written agreement made on 24 July 2007. The agreement contemplated the supply of approximately eleven million litres to Ashakacem’s storage facilities at Ashaka and Kano. The agreed prices were N65.00 per litre for supplies to Ashaka and N59.50 per litre for supplies to Kano, with payment to be made within two weeks after delivery and confirmation of receipt.

Following an increase in the market price of LPFO, the respondent requested a review of the agreed prices. In exhibit M, it made separate proposals concerning supplies to Kano and Ashaka. The respondent later contended that the parties had agreed on a uniform revised price of N75.00 per litre for supplies to both locations. Ashakacem disputed this contention, maintaining that there had been no acceptance of a revised Kano price of N75.00 per litre and that any price review applied only to supplies to Ashaka.

A dispute also arose over the quantity delivered to the Kano storage facility. The respondent relied on delivery records and electronic correspondence indicating that 6,384,469 litres had been delivered and accepted. Ashakacem alleged a shortfall. A letter dated 2 March 2009, written during negotiations aimed at reconciling the dispute, referred to a compromise concerning part of the alleged shortfall. The trial court rejected the letter as privileged and awarded the respondent N91,662,435.44. On appeal, the Court of Appeal upheld the finding that 6,384,469 litres had been supplied but allowed the respondent’s cross-appeal, increasing the award to N126,777,014.37 on the basis that the revised price was N75.00 per litre. Ashakacem appealed to the Supreme Court.

Issues

1. Whether exhibits E and M established an agreement to vary the Kano supply price from N59.50 to N75.00 per litre.
2. Whether the letter dated 2 March 2009 was properly rejected as a privileged communication made during settlement negotiations.
3. Whether exhibit L, an electronic communication with an attached internal memorandum, was admissible despite alleged non-compliance with section 84 of the Evidence Act and the absence of a signature.
4. Whether the lower courts selectively interpreted exhibit K in determining the quantity of LPFO delivered to the Kano facility.

Ratio Decidendi

The Supreme Court reaffirmed that the essential ingredients of a valid contract are offer, unqualified acceptance and consideration. An offer must be accepted exactly and unconditionally; a purported acceptance that changes the terms of the offer amounts to a counter-offer. The Court held that exhibit M contained a request for a Kano price of N69.50 per litre and a separate proposal concerning Ashaka, while exhibit E did not amount to an unqualified written acceptance of the alleged N75.00 Kano price. Consequently, the Court of Appeal erred in treating N75.00 as the agreed price for Kano supplies.

The Court also applied section 128(1) of the Evidence Act, which prevents parties from using oral evidence to contradict, add to, subtract from or vary the terms of a written contract. Contractual documents must be interpreted by the court from their language and read as a whole. The primary responsibility for interpreting documentary contracts rests with the court, not with the parties through oral testimony.

Communications made during genuine negotiations or mediation are protected by the “without prejudice” rule. Their inadmissibility is founded on public policy: parties must be able to make concessions and speak freely in an attempt to settle disputes without fear that their statements will later be used against them in litigation. This protection may apply even where the words “without prejudice” are not expressly written on the document.

The Court further held that an objection to the admissibility of a document must ordinarily be made when the document is tendered, rather than at a preliminary stage. Although signatures ordinarily assist in proving origin and authenticity, the absence of a signature is not invariably fatal. An unsigned document may be admitted where its origin and authenticity are established by other evidence, particularly where a relevant witness acknowledges it.

Court Findings

The Supreme Court accepted that there was no satisfactory evidence of an unqualified acceptance of the proposed N75.00 price for Kano. In that respect, the Court resolved the first issue in favour of Ashakacem and rejected the Court of Appeal’s reasoning on the price variation. However, the Court upheld the concurrent factual finding that 6,384,469 litres of LPFO had been supplied and accepted at Kano. Exhibits F and L, together with the evidence of Ashakacem’s purchasing manager, supported the quantity recorded by the lower courts. The appellant had not shown that this concurrent finding was perverse or likely to occasion a miscarriage of justice.

The Court upheld the exclusion of the 2 March 2009 letter because it was produced in the course of settlement discussions. It also declined to disturb the admission and use of exhibit L. The electronic communication’s authenticity had been confirmed by the appellant’s own witness, who acknowledged that it had been copied to him and that it confirmed the relevant delivery figure. The complaint concerning section 84 of the Evidence Act was also treated as incompetent or belatedly raised at the Supreme Court stage without the necessary procedural foundation.

Conclusion

The appeal was substantially dismissed. The Supreme Court affirmed the lower courts’ findings on the quantity supplied, the admissibility of the relevant documents and the respondent’s entitlement to payment, while rejecting the alleged N75.00 contractual variation for Kano. The judgment records the appeal as dismissed, with costs of N1,000,000 awarded to the respondent. Although the report also describes the appeal as allowed in part, the operative overall result was the affirmation of the Court of Appeal’s judgment and consequential orders, subject to the Supreme Court’s reasoning on the price issue.

Significance

The decision is important in Nigerian commercial law for its treatment of written contracts, price variation and electronic evidence. It demonstrates that a party seeking to establish a contractual amendment must prove a definite offer and unqualified acceptance; commercial correspondence that is ambiguous or silent will not, without more, establish a variation. It also reinforces the rule that documentary terms cannot be altered by oral testimony. At the same time, the decision recognises that unsigned documents and electronic communications may be admissible where independent evidence authenticates their source. Finally, it strongly protects settlement communications so that mediation and other consensual dispute-resolution processes are not undermined by the prospect of subsequent use in court.