The Untold Truth About Business Contracts Every Nigerian Entrepreneur Must Know

If you’re running a business in Nigeria, whether you’re just starting out in Lagos or steering an established company in Abuja, contracts are the backbone of your success.

Here’s the thing: contracts are not just paperwork. They’re the invisible guardrails that keep your business deals on track, protect your money, and prevent misunderstandings that could cost you everything.

In fact, a 2023 report by the Nigerian Bureau of Statistics revealed that over 40% of business disputes in Nigeria stem from poorly written or nonexistent contracts. That’s almost half of the conflicts that could have been avoided with proper documentation.

So, if you’ve ever wondered:

• What types of contracts do I actually need?

• How do I make sure they’re valid under Nigerian law?

• What mistakes should I never make again?

This guide is for you.

What Exactly is a Business Contract?

Think of a contract as your business GPS. It tells both parties where they’re headed, how they’ll get there, and what happens if someone takes a wrong turn.

Legally speaking, a contract is a binding agreement that outlines rights, responsibilities, and obligations. For it to stand in court in Nigeria, it must have:

• Offer and Acceptance – A clear proposal and agreement.

• Consideration – The “value” exchanged (money, goods, services, or promises).

• Legal Capacity – Both parties must be adults of sound mind.

• Lawful Purpose – It must not break Nigerian law.

• Mutual Consent – Agreement must be free from coercion or fraud.

Get these right, and you’re no longer relying on handshakes or “gentleman’s agreements”; you’ve got real protection of Business contracts in Nigeria. 

The 5 Must-Know Business Contracts Every Nigerian Entrepreneur Needs

1. Employment Contracts

Hiring staff? Don’t just agree on “we’ll sort it out later.” An employment contract shields both you and your employee from disputes.

Why it matters:
Without clear terms, your star hire could later claim you promised more money, benefits, or flexible hours. That could spiral into lawsuits or reputation damage.

Key things to include:

• Job description and responsibilities

• Salary, bonuses, and benefits

• Working hours and leave entitlements

• Confidentiality and data protection

• Termination conditions and notice period

• Dispute resolution process

2. Sales and Service Contracts

If you sell goods or services, this is non-negotiable.

Imagine this: You supply textiles to a retailer in Ibadan. Without a written agreement, the buyer delays payment for months or claims your delivery wasn’t up to standard. With no contract, your chances of recovering that money shrink dramatically.

What to include:

• Clear product or service description

• Payment terms and timelines

• Delivery schedule and logistics

• Warranties and quality benchmarks

• Allocation of risks (e.g., damage in transit)

• Remedies if someone breaches the deal

3. Partnership Agreements

Going into business with someone? A partnership agreement is your business prenup.

Why it matters: Partnerships in Nigeria collapse daily, not because the business failed, but because partners didn’t define how to share profits, handle disagreements, or exit the business.

What to lock in:

• Capital contributions

• Profit/loss sharing formula

• Decision-making powers

• Dispute resolution process

• Exit and succession plans

• Non-compete/confidentiality clauses

4. Lease Agreements

Whether you’re renting a shop in Ilorin’s market or an office in Victoria Island, your lease defines your survival in that space.

What to cover:

• Lease term and renewal rights

• Rent, deposits, and payment dates

• Property use restrictions

• Maintenance responsibilities

• Termination conditions

• Subletting permissions

5. Non-Disclosure Agreements (NDAs)

Nigeria’s innovation and tech boom makes protecting your intellectual property more important than ever.

NDAs stop employees, vendors, or investors from leaking your trade secrets.

What to include:

• What counts as confidential information

• Permitted vs. forbidden uses

• Duration of confidentiality

• Exceptions (e.g., already public info)

• Remedies for breaches of Business contracts in Nigeria

• Return/destruction of shared documents

Avoiding the Most Common Contract Mistakes

Many Nigerian entrepreneurs fall into these traps:

• Forgetting Force Majeure Clauses – Essential in a country with infrastructure challenges, strikes, and political disruptions.

• Ignoring Dispute Resolution Options – Arbitration is often faster and cheaper than dragging disputes through Nigerian courts.

• Skipping Governing Law Clauses – Especially for cross-border deals.

• Leaving Terms Vague – Replace “deliver soon” with “deliver within 14 working days.”

Why You Should Always Get Legal Advice

Yes, you can download templates online. But Nigerian business law is constantly evolving thanks to reforms like the Companies and Allied Matters Act (CAMA) 2020, and one mistake could cost millions.

A good lawyer will:

• Customize contracts to your industry

• Ensure compliance with Nigerian regulations

• Spot vulnerabilities you may overlook

• Negotiate stronger terms for you

• Defend your interests when disputes arise

Think of legal counsel not as an expense, but as an insurance policy for your business’s future.

Conclusion

At their core, business contracts are not about mistrust; they’re about clarity, structure, and growth.

Whether you’re:

• Negotiating with a supplier in Ilorin,

• Hiring talent in Port Harcourt, or

• Sealing a partnership in Lagos,

Your contracts decide if those opportunities will scale your business or sink it.

So the next time someone tells you, “We don’t need to write this down, trust me,” remember this: trust is good, but contracts are better.

Ignorantia Juris Non Excusat
(Ignorance of the law is not an excuse)