Five Contract Drafting Mistakes That Cost Nigerian Businesses Millions

Contracts are read carefully twice: once by the lawyer who drafts them, and once by the party who is losing. Everything in between is goodwill.

Most of the commercial disputes OAA Law is instructed on could have been prevented — not by better advocacy, but by better drafting eighteen months earlier. These are the five failures we encounter most often in Nigerian commercial agreements.

1. Scope and payment terms that mean whatever the reader wants

"The Contractor shall provide project support services as required." That sentence has funded a great deal of litigation.

Vague scope creates two disputes at once: the client believes a task is included, the supplier believes it is additional, and neither can point to language that settles it. Payment terms compound the problem — "payment within 30 days of invoice" says nothing about when an invoice may validly be raised, what documentation must accompany it, whether milestone acceptance is required, or what happens on late payment.

Good drafting is specific to the point of tedium: deliverables listed, acceptance criteria stated, milestones tied to payments, invoicing conditions defined, interest on late payment expressed as a rate, and a variation procedure that requires written agreement before extra work begins. Our law firm applies this discipline to every commercial agreement we draft.

2. Dispute resolution written as an afterthought

The dispute-resolution clause is the one provision drafted for the moment the relationship fails, and it is routinely the least considered clause in the document.

Common failures include arbitration clauses that name a non-existent institution, clauses that require arbitration but also confer exclusive jurisdiction on a court, no stated seat, no appointment mechanism if a party refuses to nominate, and escalation provisions with no deadlines so a party can stall indefinitely in "good faith negotiations".

A clause that is ambiguous is a clause that generates a preliminary fight about where the fight will happen — often at a cost exceeding the value in dispute. OAA Law negotiates dispute-resolution terms as commercial terms: forum, seat, rules, tribunal, language, governing law, and interim relief, all stated plainly.

3. Ignoring the Nigerian regulatory layer

A commercial agreement in Nigeria does not sit in a vacuum. Depending on the sector, it may engage Nigerian Content requirements, NCDMB obligations, sector regulator approvals, foreign exchange and capital importation rules, data protection duties, tax and withholding obligations, and industry-specific licensing.

Contracts drafted without that layer allocate risk that the law has already allocated differently, and parties discover the gap when a regulator, not a counterparty, raises it.

Regulatory exposure is rarely negotiated away. It is either priced, insured, or discovered late.

This is territory our law firm knows from the inside. The Principal Partner spent years administering contracts within Nigeria's oil and gas sector and was part of the team that negotiated the statutory requirement for oil and gas companies to pay 1% of contract value to the NCDMB — persuading International Oil Companies to absorb the cost rather than pass it down to Nigerian contractors. Regulatory cost allocation is a negotiation, and it belongs in the contract.

4. Copy-pasted foreign templates

An agreement downloaded from a US or UK precedent bank will contain concepts that do not translate: references to statutes that do not apply, remedies that Nigerian courts will not grant as drafted, service provisions that ignore local practice, and boilerplate limitation periods inconsistent with Nigerian law.

More subtly, foreign templates assume enforcement infrastructure — summary judgment practice, disclosure, cost recovery — that behaves differently here. A clause that is efficient in London can be inert in Lagos.

Every template OAA Law works from is adapted to Nigerian law and Nigerian enforcement reality before it goes near a signature page.

5. No exit, no termination, no off-ramp

Parties negotiate the beginning of a relationship with great care and the end of it with none. The result is an agreement that cannot be exited without breach.

A properly drafted agreement states: termination for convenience with notice, termination for cause with a cure period, the consequences of termination (payment for work done, return of materials, licence survival, transition assistance), what happens on insolvency or change of control, and which obligations — confidentiality, indemnities, dispute resolution — survive the end of the contract.

Without these, a company that simply wants out must either continue performing an unprofitable agreement or breach it and price the exposure.

What a contract review should give you

When our law firm reviews a commercial agreement, the client receives a marked-up draft and a short risk note in plain language: what the real exposure is, which clauses matter commercially, what we recommend pushing on, and what is safe to concede. Legal analysis is included, but the recommendation comes first.

OAA Law drafts, reviews and negotiates commercial contracts, MOUs, service agreements, tender documentation, joint venture and shareholder agreements for Nigerian businesses of every size. Send us the draft before you sign it — a review takes days, and the alternative takes years.