United Bank For Africa v. Mr. S. D. Folarin & Anor (2002)



United Bank For Africa v. Mr. S. D. Folarin & Anor (2002) – CA

by PaulPipar



United Bank for Africa



1. Mr. S. D. Folarin
2. Themes And Schemes Limited


(2002) LPELR-7178(CA);
[2003] 7 NWLR (Pt.818)18;


Court of Appeal


Chukwuma-Eneh, J.C.A.



– M. B. Ganiyu


– J. O. K. Oyewole


The 1st respondent requested the appellant, the bankers for the respondents, for a cheque for the sum of ten thousand pounds sterling payable in London on 21/9/92. The appellant did as instructed and debited the 1st respondent’s domiciliary account with the appellant. In the United Kingdom (U.K.), the 1st respondent paid the draft into his account and issued cheques for the businesses he conducted on behalf of the 2nd respondent, and paid for them based on the appellant’s said cheque he lodged in the account with his London bankers.

Because the appellant’s said cheque lodged into the 1st respondent’s London account bounced, the cheque issued by the 1st respondent for various business transactions conducted in Europe fell through. And the respondents claimed they had suffered substantial losses. The appellant laid the fault on the break down of its telex machine.

The plaintiffs’ claim against the defendant in the court below i.e. High Court of Lagos (Coram Shitta-Bey, J.) is for the sum of N10 million, being special and general damages suffered by the plaintiffs (respondents).

In respect of the issues identified for determination in the matter, the appellant had on issue one repudiated any contractual relationship with the 2nd respondent and relied on the letter of application exhibit “SOF1” from the 1st respondent, a Director in the 2nd respondent’s company, to debunk any contract with the 2nd respondent for a bank draft that is exhibit “SOF2” raised by the 1st respondent

The court below found for the plaintiffs and awarded the sum of N8,000,000.00.

The court below then added this: “In arriving at the above award, I have taken into consideration the fact that the plaintiff’s losses were incurred in Pounds Sterling and were converted into Naira equivalent, and also the fact of the considerable de-valuation of the Naira.”

Dissatisfied with the decision, the defendant/appellant appealed to this court upon an amended notice of appeal.


1. Whether there is a contractual relationship between the appellant and the 2nd respondent in the transaction that led to this suit as to make the appellant liable to it in damages?

2. Whether the transaction that gave rise to this suit is strictly an issue confined to the provisions of the Bills of Exchange Act, Cap. 35, Laws of the Federation of Nigeria, 1990?

Available:  Chief D.S. Yaro v. Arewa Construction Limited & Ors. (2007)

3. Whether upon the wrongful dishonour of a cheque the only person entitled to have damages awarded in its favour is the “drawer” of the cheque who is the person upon which the law confers a standing to sue?

4. Whether the learned trial Judge was right in making the award of special and general damages?


1. As for issue 1, the Court of Appeal gave judgement in favour of the Appellant. It held:

“the 2nd respondent remained a total stranger in every sense of the term to the instant contract”;

“I agree the 2nd respondent cannot maintain a joint action with the 1st respondent on it against the appellant for want of the standing to sue.”;

“Even moreso exhibit “SOF1” – the letter to the appellant was typed on the 1st respondent’s letter head as against the company’s letter head. The cheque exhibit “SOF2” was drawn in his name. No where in exhibit “SOF1″ was it stated he was acting for the 2nd respondent and its involvement in the matter was not spelt out.”;

“The oral evidence of the 1st respondent portrayed him as one actively acting for himself as he even confessed that he never informed the bank (i.e. the appellant) the purpose of any of his transactions.”;

2. On issue 2, the Court of Appeal gave judgement in favour of the Respondent. It held further:

“I think, the appellant must be mistaken in considering the instant draft drawn in the circumstances as here as a bill of exchange as defined by section 3 of the Bills of Exchange Act.”;

“I have no doubt that the instrument is equivalent to a promissory note, In which case, the question of protesting the bill does not arise.”

3. On issue 3, the Court of Appeal held, “Besides, suing in contract founded on exhibit “SOF1 – The letter requesting for the draft” has made it unnecessary to consider as a matter of urgency in the event of the dishonour whether it was the drawer or the payee who had to sue for damages. All the same in contracts as here, only parties to it have rights and liabilities under it and can sue upon it.”

4. On issue 4, judgement was given, in part, against the Appellant. The Court of Appeal held further:

“The special damages claimed, included namely, transport expenses to and from the U.K. by 1st class; and hotel accommodation and feeding for 7 days, expected profits from cancelled purchases and lost deposits thereon. There can be no doubt, that the above mentioned expenses would flow naturally from the breach of such contract. Although, it should be mentioned that the claim for transport, accommodation and feeding expenses clearly come within the expenses that naturally flowed from the said breach and also within the contemplation of the parties, they have to be proved strictly. The court below found for the respondents for these expenses incurred by the 1st respondent personally and not from the £10,000.00. On the facts of the matter, there were evidence in support of the finding. This court will not interfere.”;

Available:  Chief Joseph Oluwole Odulate v. First Bank Nigeria Limited (2019) - CA

“As for the expected profits from cancelled purchases and lost deposits thereon, these in my view, fall within the second limb of damages as enunciated in Hadley v. Baxendale and are recoverable provided they were shown to be within the contemplation of the parties at the time of entering into the contract … No where on the records is how the 10,000.00 was to be used mentioned. I have perused through the cases of Uwa Printers Ltd. v. Investment Trust Ltd. (supra). A.-G., Oyo State v. Fairlakes Hotel Ltd. (No.2) and Artra Industries Nigeria Ltd. v. N.B.C.I. (supra) cited by the appellant and they seem to settle that a plaintiff claiming expected or anticipated profits has to give credible evidence as to the projected profits … The claim for N2,000,000.00 is to say the least not supported by any credible evidence. They were purchases made on behalf of the 2nd respondent, who as found above was not a party to the aforesaid contract and not a proper party on the said contract in this suit. The award was therefore given on erroneous principle. It is equally two remote.”




Importantly, in banking business the relationship between a bank and its customers is contractual, and by the law of privity of contract strangers to a contract are precluded from suing on it, even if the contract was made for their benefit. – Chukwuma-Eneh, J.C.A. United Bank For Africa v. Mr. S. D. Folarin & Anor (2002)

It is settled that the measure of damages in contract, is determined on the principles enunciated in Hadley v. Baxendale (1854) 9 Exch. 341 at 354, which contemplated loss naturally flowing from the breach, that is to say, is incurred as a direct consequence of the breach. – Chukwuma-Eneh, J.C.A. United Bank For Africa v. Mr. S. D. Folarin & Anor (2002)

In tort of negligence the measure of damages is founded on the principle of restitutio in integrum. That is to say, entitlement to such as will put the plaintiff in the position he would otherwise have been but for the happening of the act of negligence. – Chukwuma-Eneh, J.C.A. United Bank For Africa v. Mr. S. D. Folarin & Anor (2002)

It is now settled that in cases as the instant one for wrongful dishonour of cheques, it becomes necessary to inquire further whether the conduct complained of and as found by the court also caused economic loss. And if so, such economic loss falls within the category of tortious conduct for which the court will award compensation. – Chukwuma-Eneh, J.C.A. United Bank For Africa v. Mr. S. D. Folarin & Anor (2002)

Available:  Akeredolu & Anor v. Mimiko & Ors. (2013) - SC

The standard of duty of care and skill owed by the banker has been set out in Agbanelo v. Union Bank of Nigeria Ltd.(2000) 7 NWLR (Pt. 666) 534 SC 127 at 243 per Ayoola, JSC thus: “A bank has a duty under its contract with its customer to exercise reasonable care and skill in carrying out its part with regard to operations within its contract with its customers. The duty to exercise reasonable care and skill extends over the whole range of banking business within the contract with the customer. Thus, the duty applies to interpreting, ascertaining and acting in accordance with the instructions of the customer. – Chukwuma-Eneh, J.C.A. United Bank For Africa v. Mr. S. D. Folarin & Anor (2002)

It is now settled that special damages have to be particularised and strictly proved by credible evidence of such a character as would suggest that the plaintiff indeed, is entitled to an award under that head. – Chukwuma-Eneh, J.C.A. United Bank For Africa v. Mr. S. D. Folarin & Anor (2002)

It is settled that only a person engaged “in trade” or “in business” may recover sustainable damages for damage to business reputation. See Kpoharor v. National Building Society (1996) 4 AER 119, Gibbons v. Westminster Bank Ltd. (1939) 3 AER 572 and Hariat Balogun v. National Bank Ltd. (1978) 3 SC 155. In other cases of dishonoured cheques, the plaintiff has to plead and prove any damage suffered or is entitled to nominal damages. – Chukwuma-Eneh, J.C.A. United Bank For Africa v. Mr. S. D. Folarin & Anor (2002)

However, a well-known exception to the doctrine of privity of contract and with which we are too familiar with in this country, is in respect of a contract relating to sale of family land under customary law. It has become well established principle in our jurisprudence, that members of the family are entitled to bring an action to set aside a deed of conveyance (to which they were no parties), which had been executed without earlier consent. see (1) Aganran v. Olushi (1907) 1 NLR 66 and (2) Lewis v. Bankole (1908) 1 NLR 81. In Adejumo v. Ayantegbe (1989) 3 NWLR (Pt. 110) 417, the Supreme Court predicated the reason for the exception on the concept of ownership of communal land at customary law; at page 444 Karibi-Whyte, JSC said and I quote: “Thus, communal or family land belongs to all members of the society, or family… Hence a member of the family who is a co-owner, is therefore not a stranger to any transaction purported to have been made in relation thereto. – Pius Olayiwola Aderemi, J.C.A. United Bank For Africa v. Mr. S. D. Folarin & Anor (2002)




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