By Amaka Ezeno, MCLArb,
A business transaction is an accounting term that relates to the events that occur with third parties (i.e., customers, vendors, etc.), having monetary value and having tangible economic value to the company’s economy as well as impacting the financial position of the company. Some business transactions are entered into through oral communication including voice notes while most of them are entered into through series of correspondences/letters/emails.
The term “business letters” refers to any written communication that begins with a salutation, ends with a signature and whose contents are professional in nature. Historically, business letters were sent via postal mail or courier, although the internet is rapidly changing the way businesses communicate.
Business letters connect companies with their clients, employees and associates and more often than not aim for one objective: the clear and precise communication of a company’s message which can also come in form of email. It is important to note that there must be proof of delivery of the business letter before the company or firm can rely on it in proof of its content.
When businesses write letters, it is important that they keep several key points in mind. Generally, business letters often contain 8 C’s: clarity, conciseness, consideration, courtesy, concreteness, cheerfulness, correctness and character.
Numerous business letters are received by offices every day. Sometimes they are not replied either deliberately or through negligence. It is either that they are not brought to the notice of management or the appropriate authority refuses to commit certain facts to writing. It is bad business practice not to reply business letters. The failure to respond to business letters and to deny any statements against interest will be treated as an admission of the statements in law which most times leads to huge financial loss to the said company.
In Trade Bank Plc. V. Chami (2003) 13 NWLR Pt. 336 P. 158 @ 219 – 220, the Court held that business letters, unlike social correspondence, deserve to be replied. Consequently, the Court would, unless the circumstance in which a business letter is written shows otherwise, infer that the failure to reply a business letter is an admission of the facts stated in the letter. This is so because what is not denied is deemed admitted.
In Waswani v. Johnson (2000) 11 NWLR Pt. 679 P. 582, the Court also stated that in business and mercantile transactions, where in ordinary course of business a party states in a letter to another that he has agreed to do certain things, the party who receives that letter must answer if he means or intends to dispute the facts that he did not agree, where there is silence in the circumstances in which a reply is obviously expected an irrefutable presumption of admission by conduct or representation is raised. Galadima, J.C.A., (as he then was), said as follows on pages 588 – 589; of the report:
The learned trial judge having considered the affidavits in the face of unchallenged documentary evidence before the Court rightly and properly found that the appellants had agreed to pay the sum of N250,000 for the preparation of legal opinion and Court processes. The letters (Exhibits CACJ1 and CACJ2) reflected the agreement and the appellants did not deny that there was such agreement. The learned trial judge rightly held that the appellants having failed to respond to the letters, were bound by the contents and reliance placed by the respondent thereon. She was also justified to hold that a prudent businessman would have reached to the correspondence had the contents been untrue. Having failed to deny the contents of Exhibits CACJ1 and CACJ2, the appellants must be deemed to have admitted the contents.
In another Court of Appeal case of Zenon Petroleum V. Idrisiyya (2006) 8 NWLR (Pt. 982) 221, the claimant alleged that the defendant hired several trailers from them but failed to pay for some of the trailers and even refused to return some of the trailers to them. The claimant’s solicitors wrote to the defendant alleging detention of their client’s trailers but the defendant failed to respond to the letter. The Court of Appeal held that the failure to respond to the letters was an admission of the detention of the trailers. The court followed the decision of the Court of Appeal in the case of Gwani V. Ebule (1990) where their Lordships held as follows:
Silence in circumstances in which a reply is obviously expected raises an irrebuttable presumption of admission by conduct or representation. In the instant case, failure of the defendant to reply to letters written by the claimant both personally and through their solicitors demanding payment for the labour he supplied from the defendant constituted an admission of liability by the defendant and lent credence to the claimant’s side of the case.”
However, there is an exception to the general principle of law expressed in the foregoing cases. For instance, in Trade Bank Plc. V. Chami (earlier cited), the Court held that it is not in every case that failure to give a reply to letters written on business matters and received by one of the parties to the proceeding would be taken as strong evidence that the party receiving the letter admitted what was asserted therein. The Court is enjoined not to take the rule as an absolute one but rather to consider each case on its own merit, and examine the circumstances under which the letter was written. It is after doing so that the Court is to decide whether it is a case where an inference of admission could safely be drawn or not.
In Emaphil v. Odili (1987) 4 NWLR Pt.67 P. 915 the Court also stated that a businessman is not obliged to reply to every letter, and it is not an absolute rule that in all cases of failure to reply, an inference of admission must be drawn. The only fair way of stating the rule of law in that regard, is that every case must be looked at in the circumstances under which the letter was written, and determine whether in the circumstances the refusal or failure to reply per se amounts to an admission. The Court is entitled to look at the facts and circumstances of the case in which an inference of an admission ought reasonably be drawn.
It is however very important to note that where a company or firm does not want the content of the business letter written by them to be used in evidence against the said company or firm, the best thing to do in the circumstance is to mark such letter “without prejudice”. This is the clear provision of Section 196 of the Evidence Act, 2011 which states that:
“A statement in any document marked “without prejudice” made in the course of negotiation for a settlement of a dispute out of court, shall not be given in evidence in any civil proceedings in proof of the matters stated in it.”