Facts:

The 1st respondent company had been awarded a contract by the Petroleum (Special) Trust Fund (PTF) to supply exercise books and the Managing Director of the 1st respondent approached the 3rd appellant who was the Managing Director of the 1st and 2nd appellants to supply the required materials. The 1st respondent made an advance payment to the 1st appellant in the name of the 1st appellant company and the 3rd appellant issued a receipt for the sum in the name of the 2nd appellant. It was expressed that the contract be completed within 14 days. During the time of performance, the appellants informed the 1st respondent that the ruling cylinders required to execute the contract were to be imported at a later date and the 1st respondent did not raise an objection. However, at a later date, the 1st respondent through its solicitors terminated the contract for non-performance within the stipulated time and demanded a refund of the money paid. When the appellants failed to pay the money demanded, the 1st respondent (as plaintiff) instituted an action jointly and severally against the three appellants and the 4th defendant now 2nd respondent, Gateway Insurance Company Limited under the undefended list procedure claiming against the appellants the sum of N2,328,600.00 (Two Million, Three Hundred and Twenty-Eight Thousand Six Hundred Naira). The trial court found for the respondent, and being dissatisfied with the decision, the appellants appealed