Shouldn’t Breach Of Concession Vitiate A Contract? By Nasiru Suwaid
Generally, human nature is built on the concept of communal social living, where human beings associate socially, to satisfy the need for procreation, understanding and development, they also interact in the form of business relationships, to meet the conditions for trading, investment and growth. In Law, it is not within the premises of power of a nation-state, to regulate and sanction social human activities.
Rather, what enforces such rejection or acceptance is the ability of a communal frown or a happy face, to have the impact of ostracizing or celebrating certain acts or actions as mortal sins or noble deeds. However, business relationships are guided by enforceable agreements called contract, which is defined as an agreement between two parties, consisting of an offer and an acceptance, that most be performed and achieved for a just recompense called consideration.
Usually and in most instances, contracts entail the performance of a certain task, pending which a payment is made as a compensation for the contractual act done, heralding the conclusion of the contract. But, in some special forms of concessionary contracts, reaching to fruition of a task undertaken and payment of expected dues, does not automatically translates into the conclusion of the contract, as the hidden intents and intendments for entering into the contract, become glaringly pronounced as effective and enforceable contractual terms, which must be fulfilled and be abided with to have a successful and conclusive completion of the contract.
Because, imbued in the hidden terms is the reason and objective of embarking on the contract, which is what the contractual document wishes to achieve, whom does it wishes to impact upon and how would it be achieved successful, to satisfy the necessary requirements of entering into the mutual business deed.
To exemplify such types of contract and put them in a proper context of an everyday commercial transaction, we can take the instance where a government agency desire a product and thus enter into a contract, on this particular case, it is for the supply of Petroleum Motor Spirit (PMS), which must be made available to the consumers, at a subsidized government fixed and approved price, that have to be reflected at the filling stations.
However, as part of the agreement meeting the requirements for making the fuel available at a subsidized rate, the contractor is assured within the terms of the agreement, that at whatever cost the company sourced for funds to execute the contract, at whatever cost the company obtained the needed foreign exchange to make the purchase, at whatever cost the company bought the product, at whatever cost the company paid for demurrage, at whatever price the product arrived at a ‘landing cost’, at whatever cost the company incurred for its transport to Product Point of Sale (PPOS), the government is subsidizing to ensure that the product is sold at a fixed government approved price.
Now, all those cost components highlighted above are part of the considerations terms of the contract, if a profit driven company is required to make available petroleum products at a subsidized rate. Thus, at the conclusion of the contract and when government performance is due to the contractor, such companies are to be paid the Foreign Exchange Differentials (FED), as if they had obtained the United States Dollar (USD) at N161 naira per dollar.
All the cost of transport from the place of purchase to the Point of Sale (POS), must be met by the government, as part of the fulfillment of the enforceable contractual consideration terms. It is most worthy of note, that one of the fundamental terms for such concessionary contracts and taken as inserted into the document, is the requirement on the contractor to make the product available to the consumer at the fixed and approved subsidized price and any deviation from that scenario, in terms of unavailability of the product at the particular fixed price, amounts to a breach for lack of performance of the contract.
It is in this context that many has found as curious and amusing, the actions of the Department of Petroleum Resources (DPR), suspending three fuel subsidy importing companies, they being; Integrated Oil, Ascon Oil and Swift Oil, for selling their products above Ex-Depot Price (EDP) of N77.60, citing the provisions of the Petroleum Act CAP 351 Laws of the Federation 1990 and Petroleum Act, as the instrument it drove its authority to suspend licenses.
Normally, by the suspended company’s actions of selling above Ex-Depot Price (EDP), they have automatically breached their product supply contract, thus, cannot claim full performance of the contract they freely entered, as such, the avenue for dealing with them by the Department for Petroleum Resources (DPR) is not some industry regulating legislation but the deed they signed with their own hands, thus bound by it.
To prove that the suspension or withdrawal of company license is not an effective way of the enforcement of a contract, rather, it is just a clever way to show the newly elected president, the Department of Petroleum Resources (DPR) is fighting corruption, pending which the license may be returned after sometime.
Thisday Newspaper of Tuesday the 4th of August, 2015, published a survey by the same Department of Petroleum Resources (DPR), indicting other fuel subsidy companies of committing similar breach, by selling products above the Ex-Depot Price (EDP) of N77.60, where MRS was cited for selling product as ‘lifting price’ at N94 naira, SAHARA’s product lifting price is N95 naira, Capital Oil’s lifting price is N91 naira, AITEO’s lifting price is N81 naira, FOLAWIYO’s lifting price is N92.50 and DEE JONES’s lifting price is N94 naira, an infraction similar to the type, which caused the other three companies to have their licenses suspended.
It is a trite rule in the Law of Contract, only proactive and effective performance ensures full payment for a task done, not by rewarding a fundamental breach because of the fear of an irresponsible cabal, who could threaten to down tools and cause scarcity, if they are not paid a monetary consideration, for a contract performance they have not met. What many Nigerians do not know, is that this is what President Muhammadu Buhari meant by fighting corruption, as it is not by transferring government’s ineffectiveness to tackle the menace of corruption through subsidy removal, to the detriment of the vulnerable poor or to cripple the economy with an inflation inducing policy but through accountability of action by each and every Nigerian citizen.
And this two other things:
EMEFIELE LAUGHING AT REWANE
If I don’t know, I would say that since the ending of last week, Mr. Godwin Emefiele, the chair at the apex bank, must have retired to the inner recesses of the Central Bank of Nigeria building in Abuja, thereby enjoying a secret laughter and a satisfactory beating of chest for refusing to submit to the norm, but most especially, for being an economic rebel, when normally, what is expected of him is to always follow the market or rather, every economic policy must be placed at the mercy of market forces. It was the past few days, the Central Bank of Nigeria (CBN) facilitated a seminar for financial correspondents, that was held in the city of Calabar, Cross Rivers state, which was titled: ‘The Impact of Crude Oil Prices on External Reserves and Exchange Management in Nigeria’, the lecture was presented by a financial industry leader and chief executive of Financial Derivatives, Mr. Bismark Rewane.
The general agreement from the forum, was that all subsidy must be removed, being the removal of fuel subsidy as a fiscal policy shift and the removal of exchange rate subsidy as a monetary policy change or to put it more glaringly clear, he called for the devaluation of the Nigerian naira, stating that all initiatives to prop up the national currency, through active and effective accountability guidelines of the rejection of any foreign currency, which does not indicate its source of origin through provision of Bank Verification Number (BVN), plus the limiting of foreign currencies availability, to the import of only goods that could not be produced in Nigeria, saying that the policy could neither work nor be effective, but, who is laughing now.
IF ONLY NIGERIA IS A COMMUNIST ENCLAVE
Last week, I nearly switched my loyalty to the opposition People’s Democratic Party, when its loquacious spokesperson pondered aloud, whether Nigeria has become a communist country, as while he was seeing things from a negative perception, I was dreaming of such a reality from the positive aspect, especially, from the angle of the implementation of the criminal justice system. Just imagine a communist Nigeria, many of the spouses and children of the key and principal officials of the former ruling party, would have become widows and orphans, thus, their families would care less about mere incarceration or even bother, about being forced to return what was illegally acquired. Because, a system that prefers summary execution for suspected corruption offenders, will have blossomed in Nigeria, what with the many of the massive looting perpetuated by the last administration, surely, such a situation would not have been an ideal, many of my countrymen and women would have been weary of.
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