Contracts: No ink, No seal…. Is the Contract still Real?
When a commitment becomes real
Understanding binding agreements, authority, and the approvals that protect you and the organisation.
Introduction
Contracts are not just legal documents, they are binding commitments that shape financial, operational, and legal obligations. In most workplaces, contracts show up everywhere, in vendor agreements, service engagements, MOUs, facility and funding arrangements, and more.
Understanding how contracts work helps prevent avoidable risk. Contracts are part of everyday work, even when we do not always call them that. It could be an email confirming terms, a signed agreement, or a document marked “draft” but already being acted on.
At its core, a contract is a promise the law is willing to enforce. Understanding the basics can help you recognise how and when commitments with third parties can carry legal weight and potential liabilities for the Corporation.
What Makes a Contract a Contract?
Under Nigerian law, a contract is an agreement enforceable by law. The courts consistently recognise four core elements:
Offer
A clear proposal of terms.
Acceptance
An unqualified agreement to those terms.
Consideration
Something of value exchanged between the parties.
Intention to create legal relations
A shared understanding that the agreement should have legal effect.
A common misconception
“If it is not signed, it is not a contract.” This is not always true under Nigerian law. Contracts can arise from email exchanges, letters, and conduct—acting on agreed terms.
Contracts should always be signed by authorised parties before implementation. A signed contract provides clear evidence of approval and protects both the staff involved and the organisation.
However, under Nigerian law, a contract may still be binding even if it is unsigned, where the parties act in a way that shows acceptance of the terms. This is known as binding by conduct. For this reason, no staff should proceed on any contract until the required approvals are obtained and the agreement is properly executed.
Can a Contract Become Binding Even Though Unsigned?
In organisations, not everyone has authority to contract, but contracts can be enforceable even without signing. That is why conduct matters.
This was illustrated in the case of MTN (Nig) Communications Ltd v. Corporate Communications Investment Ltd (2019). The agreement was drafted by MTN and sent to the respondent for signature. The respondent signed, but MTN did not. However, both parties proceeded to transact business based on the agreement. MTN later terminated the arrangement without complying with the contract terms.
The respondent sued for wrongful termination, and the trial court awarded ₦25 million in damages against MTN. MTN appealed the decision, but the Supreme Court held that MTN could not take advantage of its own wrongdoing by deliberately withholding its signature while acting under the contract.
How Do I Know if I Have Authority to Act?
The authority to bind an organisation usually comes from Board resolutions, Delegation of Authority (DOA) frameworks, and internal policies. Under the Companies and Allied Matters Act (CAMA) 2020, companies act through their Board or authorised officers acting within delegated powers.
Staff must therefore ensure that, in their engagements with third parties, they have the necessary authority to negotiate or commit the organisation.
Every staff member should also understand the Delegation of Authority policy. If you do not have a copy, it can be accessed through CrediGuide, or Barr. Cred can help break down the different levels of authority and what they entail.
Why Authority Matters
Even a well-negotiated contract can create risk if it is signed by someone without authority. Approval thresholds and signing authority exist to protect the organisation, manage risk exposure, and ensure accountability.
Authority is not about hierarchy; it is about governance.
Process Is Not Optional
Legal review, procurement checks, risk and compliance, audit checks, and internal approvals are not formalities. They ensure consistency in contracts, compliance with policy, and protection for staff acting on behalf of the organisation.
Skipping steps may feel efficient towards achieving quicker results, but it can create long-term issues.
What This Means for You
If something feels like a commitment, it may already have legal implications.
Before proceeding, confirm the approval status, check delegated authority, and involve Legal, Procurement, and Risk and Compliance departments early on in negotiations and engagements with third parties.
That pause protects you, the organisation, and the integrity of the transaction.
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