7 Clause-Level Mistakes That Sink Nigerian Commercial Contracts

Contract disputes are the single largest source of commercial litigation in Nigeria. Many of them are avoidable. After reviewing thousands of commercial agreements — from bank facility letters to infrastructure concession agreements — the same drafting errors appear again and again.

1. Ambiguous Payment Terms

"Payment within a reasonable time" is not a payment term. It is an invitation to argue. Payment provisions must specify the amount (or formula for calculating it), the currency, the payment method, the due date, and the consequences of late payment. Every one of these elements.

2. Missing Force Majeure Precision

The COVID-19 period exposed how poorly drafted most Nigerian force majeure clauses were. A clause that simply lists "acts of God, government action, or other events beyond the parties' control" provides almost no certainty. A well-drafted force majeure clause defines the triggering event with specificity, requires notice within a defined period, specifies the consequence (suspension, termination, price adjustment), and excludes economic hardship from the definition.

3. Jurisdiction and Governing Law Mismatches

In cross-border transactions, it is common to find agreements governed by English law with an Abuja High Court jurisdiction clause. This is not necessarily wrong — but it is often unthought. The choice of governing law and forum should be deliberate, considering where enforcement will actually occur and which law gives the intended outcome.

4. Indemnity Scope Not Limited

Unlimited indemnities are frequently signed without proper analysis. An indemnity that covers "all losses, costs, claims and damages arising from or related to" a broadly defined event can expose a party to liabilities many multiples of the contract value. Indemnities should be narrowly scoped, capped, and subject to a duty to mitigate.

5. Assignment Without Consent Rights

Standard assignment clauses that allow assignment without prior written consent can result in a party finding itself in a commercial relationship with an entity it never agreed to deal with. In Nigeria's M&A environment, assignment and change of control provisions require careful attention.

6. Termination for Convenience Without Notice

A right to terminate "for convenience" with no minimum notice period, or with a notice period shorter than the natural performance period of the contract, can effectively render the agreement illusory — there is no real obligation if it can be escaped instantly. Courts may imply a reasonable notice obligation regardless, but this creates litigation risk.

7. Dispute Resolution That Nobody Will Actually Use

Arbitration clauses that reference the ICC or LCIA but fail to specify the seat, the number of arbitrators, or the language create procedural chaos when a dispute arises. Dispute resolution provisions should be drafting with the dispute actually in mind — who will initiate, where, at what cost, and how long it will take.