The Respondent, a merchant banker, sometime in August, 1991 granted a loan facility of N5 million to one of its customers called Pastinor Investment Company Limited for the purchase of Nigerian wheat to be supplied to the Appellant. The loan was to be paid from the proceeds of sale of wheat by the Appellant after taking delivery of the wheat. On the 30th of August, 1991, the Appellant wrote to the Respondent Bank confirming to make payment to the Respondent in respect of deliveries made to the Appellant. The Respondent contended that it granted the said loan to Pastinor Investment Co. Ltd and also caused the wheat to be delivered to the Appellant through the warehousing agents called SGS Inspection Services (Nig) Ltd. An executed Domiciliation Form and Notice Delivery of the wheat were Exhibited as exhibits C and D respectively in support of the summons. The Respondent further contended that it demanded from the Appellant payment for the loan facility but that the Appellant declined to honour its undertaking to pay directly to the Respondent in spite of demands in consequence of which the Respondent instituted this action against the Appellant

Appellant denied that any delivery was made to it in respect of the transaction forming the subject matter of the respondent's action. It also denied that money was advanced to Pastinor Ltd. It pointed out that while a particular exhibit in the affidavit deposed to by the respondent indicated that the loan was N5 million another stated that the undertaking to repay was in respect of N10 million loan. The appellant also challenged the jurisdiction of the trial court to entertain the matter as it (the appellant) carries on business in Edo State. The appellant also stated that it had withdrawn its commitment to the undertaking. It urged the trial court to, at least, allow it defend the action on its merit.

The trial court gave judgment to the respondent as claimed, although the interest stipulated in the contract was 21% per annum.

Dissatisfied appellant appealed to the Court of Appeal.