The plaintiff is a company incorporated in Nigeria among its businesses is sale and supply of steel billets. In the course of supply of the steel billets, it was awarded a contract to supply steel billets to Katsina Steel Rolling Company Limited in Katsina, Katsina State of Nigeria. The contract dated 15th April. 1992 was written with reference of contract No. KSRC/SEC/TIC/92/2. The contract price was N39.990.0000.00 thirty-nine million, nine hundred and ninety thousand Naira). The written contract was tendered and admitted n evidence as Exhibit Pl.

Owing to the volume of the supply, plaintiff was to source the supply through other suppliers which amongst others was Cargill Ventures Limited. This company demanded a bank guarantee for the contract sum of N39,990,000.00 from reputable bank as a condition precedent before it would supply the billets. To meet the condition precedent plaintiff approached the defendant a company incorporated in Nigeria as a limited liability finance security company which carries on the business in financing contract by way of providing guarantees, and to secure the relevant guarantee.

The defendant agreed to procure guarantee provided plaintiff paid in advance a sum of N1 million Naira for services to be rendered by the defendant. The financial arrangement between the parties was reduced into writing and was marked as Exhibit P3 which was also the same document marked Exhibit D2.

In compliance with Exhibit P3 defendant issue a letter of guarantee to Cargill Ventures Ltd. the supplier of 50000 metric tons of billets, the subject matter of the contract Exhibit P1. Defendant in addition to its letter of guarantee though not required by its contract to convince Cargill Ventures Ltd. of its financial stability procured a credit reference from its bank which was admitted and marked Exhibit D13. It also provided a bond which is also treated in business world as a guarantee. The personal guarantee of the defendant was rejected by Cargill Ventures Ltd. as a result of which the plaintiff after lodging the sum of N1 million for the financial arrangement to procure the sum N39,990,000.00 he contract price lost the contract to supply billets worth N40 million Naira. Cargill Ventures Ltd. rejected the letter of guarantee issued by the defendant instead of a bank guarantee from a reputable bank.

The trial court held that the appellant was in breach of the contract by not supplying a bank guarantee. It awarded N11.50m for the respondent for loss of profit and cumulative interest of N1,122.128.00. The court dismissed the counter-claim of the appellant.

Dissatisfied with the judgment, the appellant appealed.