The previous topic showed where Nigerian law comes from. This one looks at the two sources that students meet most often in practice: legislation, made by the legislature, and judicial precedent, made by the courts. You need to know the forms of legislation, the features of the Constitution, how a bill becomes an Act, who may legislate on what, and how the doctrine of precedent works.
Tax law is included because the 2025 tax reform replaced a number of older statutes, and the syllabus now lists the new tax Acts and the body that settles tax disputes.
In 30 seconds
The Constitution is the supreme law, written, rigid, federal, based on the separation of powers and the rule of law, and it guarantees fundamental rights. Acts come from the National Assembly, Laws from State Houses of Assembly, and bye-laws from local councils. A bill goes through first reading, second reading, committee, report, third reading and presidential assent. Legislative powers are split into exclusive, concurrent and residual lists.
Precedent means lower courts follow higher courts on similar facts. Only the ratio decidendi binds. The Supreme Court is not bound by its own past decisions.
Nigerian legislation
| Form | Made by |
|---|---|
| Constitution | The supreme law of the land |
| Act | The National Assembly (Senate and House of Representatives) under a democratic government |
| Decree | The federal military government |
| Law | A State House of Assembly |
| Edict | A state military government |
| Bye-law | A local government council |
The Constitution
Any law that contradicts the Constitution is void to the extent of the conflict. Its main features are these.
- Supremacy. Section 1 binds all authorities and persons, and no part of Nigeria may be governed except in line with it.
- Writing and rigidity. It is written, and amending it takes a two-thirds majority of the National Assembly supported by two-thirds of the State Houses of Assembly.
- Federalism. Power is shared between the federal and state governments. If a state law conflicts with a federal Act on the same matter, the Act prevails.
- Separation of powers. The executive, the legislature and the judiciary each have their own functions and act as checks on one another.
- Rule of law. No one is judge in his own cause, and no one is condemned unheard.
- Fundamental human rights in Chapter IV, including the rights to life, dignity of the person, personal liberty, fair hearing, private and family life, freedom of thought, conscience and religion, freedom of expression and the press, peaceful assembly and association, freedom of movement, and freedom from discrimination. A person whose right is infringed may apply to a State High Court or the Federal High Court under the fundamental rights enforcement rules.
Nigerian tax law
Tax law is statutory. The 2025 reforms produced the Nigeria Tax Act 2025, which unified the law on taxing income, transactions and instruments and repealed older statutes such as the Companies Income Tax Act, the Personal Income Tax Act, the Capital Gains Tax Act and the Petroleum Profits Tax Act. Related Acts cover tax administration, the Nigeria Revenue Service and the Joint Revenue Board of Nigeria.
The Board settles disputes between tax authorities over residency, advises on double taxation and on new taxes, promotes uniform revenue administration and supports tax policy reform.
The Tax Appeal Tribunal hears disputes arising from the application of the tax laws. It has five members, called Tax Appeal Commissioners, appointed by the Minister of Finance. They must have at least ten years of relevant experience in law, accounting, business administration, finance, economics or taxation, or be retired public servants with ten years in tax administration, or members of the organised private sector. A quorum is three members.
Judicial precedent
Judicial precedent, or case law, rests on stare decisis: stand by what has been decided. Lower courts follow the decisions of higher courts in cases with similar facts, which makes the law certain. Only the ratio decidendi, the material facts plus the decision on them, forms a precedent. Remarks made by the way are obiter dicta and need not be followed.
| Type | Meaning |
|---|---|
| Original precedent | The point of law has never been decided before, so the decision creates the rule |
| Binding precedent | A decision of a higher court that a lower court must follow on similar facts |
| Persuasive precedent | Not binding but may be followed: decisions of courts of the same level, obiter dicta, dissenting judgments and decisions of courts in other common law countries |
| Term | Meaning |
|---|---|
| Distinguishing | A judge finds that the facts of the case are materially different, so the earlier decision does not bind |
| Overruling | A court, a higher court or a statute nullifies an earlier decision and a new rule follows |
| Reversing | A higher court overturns the decision of a lower court in the same case on appeal |
| Per incuriam | A decision made in error, for example by overlooking a relevant statute. It is a ground for not following it |
| Advantages | Disadvantages |
|---|---|
| Certainty: people can know the law | Rigidity, since lower courts must follow higher ones |
| Consistency and fairness: like cases are treated alike | Loss of initiative among lower court judges |
| Saves the court’s time | Distinguishing can lead to illogical distinctions |
| Hard to find the relevant case and to separate ratio from obiter | |
| Slow development, because appeals take long |
Precedent works only if there is a settled hierarchy of courts and a good system of law reporting. The Supreme Court is not bound by its own earlier decisions, but it usually follows them. It may depart when a past decision was made per incuriam or when two earlier decisions conflict, in which case it follows one and overrules the other.
The Court of Appeal is bound by its own earlier decisions, subject to the same exceptions, as Young v Bristol Aeroplane (1944) held, and it may choose between conflicting decisions.
The legislative process
A bill is a proposal intended to become law. A public bill concerns the public interest, such as security, education, housing or health. A private bill concerns a group, locality, region or profession. A bill is introduced in either House of the National Assembly, or in a State House of Assembly, and passes through these stages.
| Stage | What happens |
|---|---|
| First reading | The title and main aims are read out. No debate, but a vote on whether to go on |
| Second reading | The House debates the principles. A majority must support it |
| Committee stage | A committee examines each clause. For finance bills the whole House sits as the committee |
| Report stage | The committee reports its amendments, and further amendments may be made |
| Third reading | A final look and final vote, almost a formality |
| Assent | The President signs the bill into an Act. A refusal, or veto, lasts only thirty days and can be overridden by a two-thirds majority of both Houses, so the bill becomes an Act without the President’s signature |
At state level the same steps are followed until the Governor assents.
Who may legislate on what
| List | Who legislates | Examples |
|---|---|---|
| Exclusive | Only the National Assembly | Defence, currency, immigration, foreign affairs, citizenship, aviation, armed forces, maritime, customs and excise |
| Concurrent | Both. If they conflict, the Act prevails and the state law is void to the extent of the conflict | Education, housing, taxation, tourism, agriculture, sports, works |
| Residual | Only the State House of Assembly | Local government administration, chieftaincy, market administration |
Worked example: applying precedent
Scenario. The Court of Appeal decided that a clause in a type of contract was unenforceable. A State High Court judge now hears a case on a similar clause, and the claimant cites a decision of the High Court of another state that went the other way. Which must the judge follow?
- Identify the hierarchy. The Court of Appeal is above the State High Court, so its decision binds the judge on similar facts.
- Treat the other state’s decision. A High Court of another state is of coordinate jurisdiction. Its decision is only persuasive.
- Look for a way out. The judge could distinguish the Court of Appeal decision only if the facts are materially different.
- Conclude. The judge must follow the Court of Appeal on similar facts and may note the other decision as persuasive only.
Legislation and precedent in more detail
The Constitution’s features explained
- Supremacy has three strands. It binds all authorities and persons. No part of the country may be governed except under it. And any other law that conflicts with it is void to the extent of the conflict. So an Act of the National Assembly that contradicts the Constitution is invalid to that extent.
- Rigidity. A Constitution is rigid when it is hard to change. This one needs a two-thirds majority of the National Assembly and the support of at least two-thirds of the State Houses of Assembly, so it cannot be altered by a simple majority.
- Federalism. Power is divided between the federal and state governments. Federal enactments are Acts and state enactments are Laws, and a federal Act prevails over a conflicting state Law on a matter on which both may legislate.
- Separation of powers. Executive, legislative and judicial power are held by different bodies, none of which exercises the powers of the others. The arrangement lets each check the others and prevents arbitrary rule. The presidential veto and its override are an example.
- Rule of law. It rests on two principles. Nemo judex in causa sua means that no one may be a judge in his own case, which demands impartiality. Audi alteram partem means that no one may be condemned without being heard, which is the right to a fair hearing.
- Fundamental rights. Chapter IV protects the rights listed in the main notes. A person whose right has been or is likely to be infringed may apply to a State High Court or the Federal High Court for redress under the fundamental rights enforcement rules.
Who binds whom: precedent in the Nigerian hierarchy
| Court | Bound by | Binds |
|---|---|---|
| Supreme Court | Not bound by its own earlier decisions, but usually follows them | Every other court |
| Court of Appeal | The Supreme Court, and its own earlier decisions, subject to exceptions | All courts below it |
| Federal High Court, State High Court, National Industrial Court, Sharia Court of Appeal, Customary Court of Appeal | The Supreme Court and the Court of Appeal. Not bound by each other | Magistrate and district courts. Persuasive only between themselves |
| Magistrate and district courts | All courts above them | Does not bind customary and area courts, which apply natural justice and are not bound by precedent |
Decisions of foreign courts, such as English courts, never bind a Nigerian court. They are persuasive only.
Finding the ratio, and avoiding a precedent
To find the ratio decidendi, identify the material facts of the earlier case and the decision reached on them. Everything else in the judgment, such as comments about hypothetical facts, is obiter dicta. A later court bound by the earlier decision has three ways to avoid it. It can distinguish it by showing that the facts are materially different.
A higher court can reverse it on appeal in the same case. A court with the power, or a statute, can overrule it. A decision made per incuriam, in ignorance of a relevant statute or binding authority, can be departed from.
The Court of Appeal’s rule from Young v Bristol Aeroplane (1944) is that it follows its own earlier decisions, except where one was reached per incuriam. It may choose between two of its own conflicting decisions.
The legislative process: what happens at each stage
At the first reading the title and main aims are read out, with a vote on whether to go further. At the second reading the House debates the principles, and a majority must support the bill. At the committee stage a select committee examines every clause in detail, while for finance bills the whole House sits as the committee.
At the report stage the committee reports back, and the House may amend further. The third reading is a final look and a final vote. The bill then goes to the President. If the President does not sign within thirty days, the bill can still become law if two-thirds of both Houses vote for it, which is how the Constitution prevents a single person from blocking legislation.
The same steps apply in a State House of Assembly, ending with the Governor’s assent.
Tax law: the bodies and their roles
The Joint Revenue Board of Nigeria brings together the tax authorities, including the Nigeria Revenue Service, the state internal revenue services, the Federal Capital Territory service and local government revenue committees. It settles disputes between tax authorities on residency, advises on double taxation, promotes uniform rates and administration, advises on new taxes, maintains a platform for sharing revenue data, publishes tax statistics, and guides the accreditation of tax agents.
The Tax Appeal Tribunal, established under the Board’s Act, settles disputes arising from the tax laws, and a decision of the Tribunal is the next step after the tax authority’s decision.
Complete reference notes for this topic
Advantages and disadvantages of judicial precedent
The syllabus lists three advantages and five disadvantages. Because examiners have asked for four advantages, learn the extra ones too.
| Advantages | Disadvantages |
|---|---|
| 1. Certainty. People can know the law on a subject and how it affects them | 1. Rigidity. Lower courts must follow higher courts, so the law may become mechanical |
| 2. Consistency and fairness. Similar cases are decided in the same way | 2. Loss of initiative for lower court judges, who are bound by higher decisions |
| 3. It saves the court’s time, since settled points need not be argued afresh | 3. Illogical distinctions. Distinguishing to avoid a past decision can produce fine and artificial differences |
| 4. Flexibility (additional point). Courts can distinguish or overrule decisions that have become unsuitable, so the law can adapt to new facts | 4. Difficulty of finding and applying cases. It may be hard to locate the relevant case and to separate the ratio from obiter remarks |
| 5. Practical, detailed rules (additional point). Rules grow out of real facts and so deal with real problems | 5. Slow development. A point can be settled only when a case reaches the right court, and appeals may take years |
Conditions for the doctrine to work
Two conditions are essential: a settled, good hierarchy of courts, so that everyone knows which court binds which; and a good system of law reporting, so that decisions can be found, read and cited accurately. Without reports there would be no way to know what has been decided.
The three divisions of government and where judicial power comes from
Judicial power is conferred on the courts by Chapter VI of the Constitution. The courts are the main formal institutions for resolving conflicts and interpreting laws. Legislative power belongs to the National Assembly and State Houses of Assembly, and executive power to the President and Governors.
Executive bills, private members’ bills and the role of the committee
A public bill may be introduced by the executive or by a member. At committee stage, a select committee takes evidence and examines each clause, which is where most detailed amendment takes place. The committee’s report goes back to the whole House at the report stage. A bill that passes both Houses, with identical text, goes to the President for assent.
Questions that have been asked on this topic, and how to answer them
| Question theme | What a full answer contains |
|---|---|
| State characteristics of the Constitution (usually four) | Choose four of: supremacy, writing and rigidity, federalism, separation of powers, rule of law, fundamental human rights. Give the meaning of each in a sentence. Supremacy and rigidity are the easiest marks |
| State advantages of case law (usually four) | Certainty, consistency and fairness, saving of time, flexibility. Explain each in a sentence |
| Explain ratio decidendi, obiter dictum and per incuriam | Ratio: the material facts plus the decision on them, which binds. Obiter: a remark by the way, which persuades only. Per incuriam: a decision made in error, for example in ignorance of a statute, which a court may decline to follow |
| Explain the types of precedent | Original, binding and persuasive, each with a sentence and an example |
| When may the Supreme Court depart from its previous decisions? | When the earlier decision was reached per incuriam, and when two earlier decisions conflict, in which case it follows one and overrules the other. Add that it usually follows its own decisions |
| Explain the stages of a bill, or the legislative lists | Six stages in order with one line each, the veto and its override. For the lists: exclusive, concurrent and residual, with the rule that a federal Act prevails on the concurrent list |
| State fundamental rights under the Constitution | Any of the ten listed, and that enforcement is by application to a State High Court or the Federal High Court |
Common mistakes in the exam
- Saying the whole of a judgment is binding. Only the ratio decidendi binds.
- Mixing overruling, which is done by a court or statute to an earlier decision, with reversing, which is done on appeal in the same case.
- Saying the Supreme Court is bound by its own decisions.
- Forgetting that a state law is void to the extent that it conflicts with a federal Act on the concurrent list.
- Confusing Acts and Laws. Acts are federal and Laws are state.
- Leaving out the veto override when describing assent.
Quick revision
- Forms: Constitution, Act, Law, bye-law, with decrees and edicts under military rule.
- Constitution: supremacy, rigidity, federalism, separation of powers, rule of law, fundamental rights.
- Precedent: ratio and obiter. Types: original, binding, persuasive. Terms: distinguishing, overruling, reversing, per incuriam.
- Bill stages: first reading, second reading, committee, report, third reading, assent. Veto lasts thirty days.
- Lists: exclusive, concurrent, residual.
Practice questions
These are original questions written in the style of the Institute of Chartered Accountants of Nigeria (ICAN) exam. Try each one before you open the answer.
Section A style: multiple choice
Question 1. A statement made by the way by a judge in delivering judgment is called:
- Ratio decidendi
- Obiter dictum
- Stare decisis
- Res judicata
Show the answer
B. It does not bind later courts.
Question 2. Laws enacted by a State House of Assembly are called:
- Acts
- Decrees
- Laws
- Edicts
Show the answer
C. Acts are federal, decrees and edicts belong to military rule.
Question 3. Matters on which only the State House of Assembly may legislate fall in the:
- Exclusive list
- Concurrent list
- Residual list
- Federal list
Show the answer
C. Local government administration is an example.
Question 4. The President’s veto of a bill can be overridden by:
- A simple majority of the Senate
- A two-thirds majority of both Houses of the National Assembly
- The Supreme Court
- The Governors
Show the answer
B. The bill then becomes an Act without the President’s signature.
Question 5. A decision made in error, for example by overlooking a relevant statute, is said to be:
- Obiter
- Per incuriam
- Persuasive
- Original
Show the answer
B. A court may decline to follow it.
Question 6. A higher court overturning the decision of a lower court in the same case on appeal is called:
- Distinguishing
- Overruling
- Reversing
- Persuading
Show the answer
C. Overruling applies to an earlier decision in a different case.
Question 7. The principle that no person shall be a judge in his own case is called:
- Audi alteram partem
- Nemo judex in causa sua
- Stare decisis
- Ultra vires
Show the answer
B. Audi alteram partem means that no one is to be condemned unheard.
Question 8. A decision of the High Court of one state is, for the High Court of another state, a:
- Binding precedent
- Persuasive precedent
- Original precedent
- Overruled decision
Show the answer
B. They are courts of coordinate jurisdiction.
Question 9. The Constitution can be amended by:
- A simple majority of the Senate
- A two-thirds majority of the National Assembly supported by two-thirds of the State Houses of Assembly
- The President alone
- The Supreme Court
Show the answer
B. That is what makes it rigid.
Question 10. A bye-law is made by:
- The National Assembly
- A State House of Assembly
- A local government council
- The federal military government
Show the answer
C.
Section B style: written questions
Question 11 (10 marks). Explain the three types of judicial precedent.
Show the marking guide
Original precedent: a point never decided before (3 marks). Binding precedent: a higher court’s decision that a lower court must follow on similar facts (3 marks). Persuasive precedent: not binding, but may be followed, with examples (3 marks). One mark for a clear introduction on stare decisis.
Question 12 (20 marks).
(a) Explain the operation of judicial precedent in the Nigerian court system, stating its advantages and disadvantages. (10 marks)
(b) State the stages through which a bill passes before it becomes an Act. (6 marks)
(c) State four fundamental human rights under the Constitution. (4 marks)
Show the marking guide
(a) 10 marks. Stare decisis and ratio decidendi (2). Hierarchy and the duty to follow higher courts, and the position of the Supreme Court (3). Three advantages and two disadvantages (5).
(b) 6 marks, 1 each. First reading, second reading, committee stage, report stage, third reading, assent.
(c) 4 marks, 1 each. Any four of the rights listed in Chapter IV.
A further written question
Question 13 (10 marks). Distinguish between ratio decidendi and obiter dictum, and explain what is meant by distinguishing and overruling.
Model answers
Show the model answer to Question 11
Types of precedent. Judicial precedent rests on stare decisis: courts stand by what has been decided. There are three types. Original precedent arises where a point of law has never been decided before, so the court’s decision creates the rule for later cases.
Binding precedent is a decision of a higher court that a lower court must follow where the facts are similar, as when the Court of Appeal’s decision binds a State High Court. Persuasive precedent does not bind but may be followed. It arises from decisions of courts of coordinate jurisdiction, obiter dicta, dissenting judgments and decisions of courts in other common law countries.
Show the model answer to Question 12
(a) Operation of precedent. The doctrine requires a settled hierarchy of courts and a good system of law reporting. Nigeria has both. A decision of a higher court binds lower courts on similar facts. Only the ratio decidendi binds.
The Supreme Court binds every court and is not bound by its own decisions, though it usually follows them and departs only where a decision was made per incuriam or two earlier decisions conflict. The Court of Appeal follows its own earlier decisions subject to the same exceptions. Courts of coordinate jurisdiction do not bind one another.
Advantages: it makes the law certain, so people know where they stand; consistent and fair, since like cases are decided alike; and it saves the court’s time.
Disadvantages: it can make the law rigid and mechanical; it can discourage initiative in lower courts; distinguishing can lead to illogical distinctions; it is hard to find the relevant case and to separate ratio from obiter; and it can slow the development of the law while appeals run.
(b) Stages of a bill. First reading; second reading; committee stage; report stage; third reading; and presidential assent. A veto lasts thirty days and can be overridden by a two-thirds majority of both Houses.
(c) Four fundamental rights. The right to life; the right to dignity of the human person; the right to personal liberty; and the right to fair hearing. Others are the rights to private and family life, to freedom of thought, conscience and religion, to freedom of expression and the press, to peaceful assembly and association, to freedom of movement, and freedom from discrimination.
Show the model answer to Question 13
The ratio decidendi is the material facts of a case together with the decision on them. It is the part that forms a precedent and binds later courts. An obiter dictum is a remark made by the way in a judgment, which does not bind and may at most persuade.
Distinguishing is the method by which a judge avoids following a past decision that would otherwise bind him, by finding that the facts of the case before him are materially different. Overruling is the nullification of an earlier decision by the same court, a superior court or a statute, after which a new rule applies.
Pathfinder on legislation, precedent and the legislative process
These are the ICAN Pathfinder questions that test this topic. ICAN owns the questions and the suggested solutions, so we point you to them and do not copy them. Open your Pathfinder, attempt each question under exam conditions, then check your answer against the notes above.
From the Business Law paper set under the previous syllabus. Part (a) asks you to explain types of precedent, starting with original precedent. Revise the table of types.
Revise first: Judicial precedent
From the Business Law paper set under the previous syllabus. Part (a) asks for fundamental human rights under the Constitution. Revise the list in the Constitution section.
Revise first: Nigerian legislation
From the Business Law paper set under the previous syllabus. Part (a) asks for the situations in which the Supreme Court may depart from its previous decisions. Revise the precedent section.
Revise first: Judicial precedent
Multiple-choice questions can test the forms of legislation, the legislative lists and the terms used in precedent. Check Section A of every diet you practise for items on these points.
Revise first: The legislative process
Source: ICAN Pathfinder, Corporate and Business Law. Diets covered: May Diet, 2022 to May Diet, 2024. Earlier diets are mapped where they fit.
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