Facts:

The respondent Company, Omni-B Nigeria Limited is a customer of the appellant bank, Lead Bank Plc. The respondent got a contract from the Ministry of Integration and Co-operation in Africa (hereinafter called the ministry) sometime in 2001, for the partitioning of their offices. The total contract sum was the sum of N7,472,277.00 (Seven million, four hundred and seventy-two thousand, two hundred and seventy-seven Naira only). The condition attached to the contract from the ministry was the making of a 70% advance payment to the respondent through the bank that would give an Advance payment guarantee (APG) and to this end, the appellant bank entered into an Advance payment guarantee with the ministry to be bound to the ministry to the tune of N5,203,892.52 (Five million two hundred and three thousand eight hundred and ninety-two naira, fifty-two kobo only) being 70% of Advance payment made to the respondent company. It was agreed that the payment be made to the appellant from the respondent’s account.