Five Commercial Contract Mistakes Nigerian Businesses Make, and How to Avoid Them

In fifteen years of commercial litigation practice, the team at Kunle Sulyman Chambers has reviewed hundreds of commercial disputes. The most consistent observation is this: the majority of them could have been avoided with a better-drafted contract at the start.

Here are the five mistakes we see most often.

1. Ambiguous Payment Terms

"Payment within a reasonable time" is not a payment term, it is a recipe for dispute. Every commercial contract should specify:

• The exact amount or a clear formula for calculating it

• The payment method (bank transfer, cheque, etc.)

• The specific due date or triggering event

• Late payment interest (a defined rate, not "interest shall apply")

• The consequences of non-payment, including the right to suspend services

When these terms are vague, each party applies their own reasonable interpretation, and those interpretations rarely align when money is at stake.

2. Missing Dispute Resolution Clauses

Nigerian businesses routinely omit or poorly draft dispute resolution clauses, leaving litigation as the default, often in courts with heavy dockets and lengthy timelines.

A well-drafted dispute resolution clause should specify:

• The primary mechanism (negotiation, mediation, arbitration, or litigation)

• The governing rules if arbitration (NCIA, ICC, LCIA, etc.)

• The seat and language of arbitration

• The number of arbitrators and appointment mechanism

• The governing law

If your contract was signed without a dispute resolution clause, any disagreement goes straight to court, with all the cost and delay that involves.

3. Inadequate Termination Provisions

Clients frequently come to us after terminating a contract under a clause that turns out to be defective, exposing them to wrongful termination claims they never anticipated.

Your termination clause should address:

• Termination for cause: what constitutes a material breach, notice requirements, and cure periods

• Termination for convenience: whether either party can terminate without cause and on what notice

• Consequences of termination: what happens to money paid, work in progress, and intellectual property

The most expensive termination disputes arise where the contract simply says "either party may terminate on 30 days' notice" without addressing the financial consequences.

4. No Intellectual Property Ownership Clause

If you engage a developer, designer, or content creator under a service contract, and the contract is silent on intellectual property, the default position under Nigerian copyright law is that the creator retains ownership of what they create.

This means your bespoke software, your marketing materials, or your product designs may legally belong to the contractor who created them, not to you.

Every service contract involving creative or technical deliverables should explicitly state who owns the intellectual property upon payment.

5. Boilerplate Force Majeure Clauses

COVID-19 brought force majeure clauses from boilerplate obscurity into active commercial dispute. Most contracts have them; most of them are poorly drafted.

A force majeure clause should:

• Define what constitutes a force majeure event with specificity (not simply "acts of God")

• Specify the obligations of the affected party: notice requirements, mitigation obligations

• State the consequences: suspension of obligation vs. right to terminate

• Set a long-stop period after which termination rights arise if the event continues

"Force majeure events beyond the parties' reasonable control" is not a definition, it is a dispute waiting to happen.

The Principle Underlying All Five Mistakes

Every one of these mistakes shares a common origin: the contract was treated as a formality rather than as the primary risk management tool for the transaction.

A well-drafted commercial contract is not expensive. The litigation it avoids is.

Kunle Sulyman Chambers provides commercial contract drafting, review, and negotiation services. If you would like your current standard contracts reviewed, contact our corporate team.