Topic 1

🟢 Lite — Quick Review (1h–1d)

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Topic 1 in the ICAN legal reasoning syllabus introduces foundational principles of Nigerian business law. This topic covers the nature and sources of business law, the legal framework governing commercial transactions in Nigeria, and the relationship between common law, equity, and statute. Students must understand how Nigerian law is structured and where business law fits within that framework.

Key Facts for ICAN (Nigeria):

• Nigerian law derives from three primary sources: the Constitution, legislation (statutes), and judicial decisions (case law)
• Customary law is also recognised in Nigeria, particularly in southern Nigeria
• The legal system is based on the English common law system, modified by local legislation
• Business law encompasses the rules governing the formation, operation, and dissolution of business organisations
• Nigeria operates a federal legal system — the Constitution is supreme; states have limited legislative power

⚡ Exam tip: ICAN questions frequently test the distinction between the various sources of Nigerian law and their hierarchy. Remember: the Constitution is supreme above all other laws.

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🟡 Standard — Regular Study (2d–2mo)

Standard content for students with a few days to months.

Sources of Nigerian Law:

1. The Constitution: The Constitution of the Federal Republic of Nigeria (1999, as amended) is the supreme law of the land. All other laws must conform to it. Any law inconsistent with the Constitution is void to the extent of the inconsistency (Section 1(1) of the 1999 Constitution). The Constitution establishes the fundamental rights provisions, the allocation of legislative powers between the Federal and State governments, and the structure of the judiciary.

2. Legislation (Statutes): Legislation is law made by the National Assembly (federal) or State Houses of Assembly (state). Important business law statutes in Nigeria include:

• Companies and Allied Matters Act (CAMA) 2020 — governs company formation and operation
• Investment and Securities Act (ISA) 2007 — regulates investments and securities
• Nigerian Insurance Act — governs insurance business
• Labour Act — governs employment relationships
• Bankruptcy Act — governs insolvency proceedings
• Contracts (Principles of the Law of Contract) — the common law of contract applicable in Nigeria

3. Case Law (Judicial Decisions): Judicial precedent (stare decisis) means that decisions of higher courts bind lower courts. The hierarchy is: Supreme Court → Court of Appeal → Federal High Court/State High Court → Magistrate/State Courts. English decisions before 1860 (before common law was received into Nigeria) are binding; decisions after 1860 are only persuasive.

4. Customary Law: Customary law is the traditional law of various Nigerian ethnic communities. It is recognised if it is not repugnant to natural justice, equity, and good conscience, and not incompatible with any law. Customary law affects land tenure (particularly in southern Nigeria), family law, and succession.

5. General Legal Principles (Common Law and Equity): The common law of England (as of 1860) and the doctrines of equity were received into Nigeria through the reception statutes. Equity developed in England as a supplement to the rigid common law — it provided remedies (injunctions, specific performance, rescission) where the common law remedy (damages) was inadequate.

The Legal Framework for Business:

Nigerian business law is primarily governed by:

• CAMA 2020 — for companies, incorporated trustees, business names, and limited liability partnerships
• Partnership Act 1890 (applicable as a federal law) — for general partnerships
• Common law of contract — the general principles binding commercial agreements
• Sale of Goods Act 1893 (applied in Nigeria) — governs contracts for the sale of goods
• Bills of Exchange Act 1877 — governs negotiable instruments

The Hierarchy of Courts: For business law disputes:

• Federal High Court has exclusive jurisdiction over admiralty, revenue, and banking (including company law matters)
• State High Courts have jurisdiction over civil matters arising within the state
• Investment and Securities Tribunal (IST) handles securities disputes
• National Industrial Court handles labour and industrial disputes

⚡ Common Mistakes:

• Confusing which courts have jurisdiction over which types of business disputes
• Forgetting that English case law after 1860 is only persuasive, not binding, in Nigeria
• Assuming all Nigerian states apply the same customary law — customary law varies by ethnic community

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🔴 Extended — Deep Dive (exam-level mastery)

For students preparing for top-rank selection.

The Reception of English Law in Nigeria:

English law was received into Nigeria through the Received English Law Ordinance 1854 (Lagos) and later the Supreme Court Ordinance 1863. The date of reception (1860) was chosen because it predated major reforms in English commercial law and before equity became fully codified. This means:

1. English common law doctrines developed before 1860 are binding
2. Equity doctrines developed before 1860 are binding
3. English statutes enacted before 1860 that were applicable in England are applicable in Nigeria (e.g., the Partnership Act 1890 was enacted after 1860 — it applies because it was extended to Nigeria by an Ordinance)

The Doctrine of Judicial Precedent in Nigeria:

The strict doctrine of precedent (stare decisis) operates in Nigeria. The Supreme Court binds all lower courts. The Court of Appeal binds itself and lower courts. A Federal High Court decision binds State High Courts. A High Court decision binds magistrate courts within that state.

However, there are exceptions:

• Decisions per incuriam (made without considering relevant authority) are not binding
• Supreme Court decisions cannot be overruled by any court below it — only the Supreme Court can overrule itself
• Persuasive authorities include decisions of the Privy Council (before independence), other Commonwealth courts, and English courts for decisions after 1860

Corporate Personality and the Law:

Under Nigerian law (CAMA 2020), a company incorporated under the Act is a body corporate with a separate legal personality from its members. This is the doctrine of corporate personality derived from the landmark English case Salomon v. Salomon & Co Ltd [1897] AC 22.

Consequences of separate personality:

• The company can own property in its own name
• The company can sue and be sued
• Members are not personally liable for the company’s debts (except in cases of fraudulent or reckless trading under CAMA 2020)
• The company’s existence is not affected by the death or insolvency of members

** piercing the corporate veil:** Courts may lift the corporate veil and hold shareholders personally liable in exceptional circumstances:

• Fraud or evasion of legal obligations (e.g., where the company is used to defraud creditors)
• Agency relationship — where the company is acting as an agent of the shareholders
• Group accounts — for financial reporting purposes
• Statutory provisions — CAMA 2020 Section 粗 (certain provisions allow veil-piercing)

The Constitution and Business Law:

The 1999 Constitution (as amended) affects business law in several critical ways:

• Exclusive Legislative List (Schedule, Part 1): Items such as banking, bankruptcy, companies, patents, trademarks, copyrights, weights and measures are exclusively within federal legislative competence
• Fundamental Rights: Sections 34–45 guarantee rights that affect business — the right to own property (Section 43), freedom from discrimination (Section 16), and freedom from forced labour (Section 34)
• Fundamental Objectives and Directive Principles of State Policy: These are not enforceable in court (Section 6(6)(c)) but guide governance