The Place And Nature Of Agreements In Property Acquisition And Development (1)
By Ebun-Olu Adegboruwa, SAN
Recently, I was the guest speaker at the General Meeting Interactive Session of the International Real Estate Federation of Nigeria held at the Federal Palace Hotel, Lagos, where we examined various issues affecting the estate development sector in Nigeria. With population explosion and lack of affordable houses for the masses, property acquisition and development have become the best form of investment and when this is combined with rising inflation, the galloping exchange rate, a foray into this risky enterprise may not be a bad idea for anyone with the heart of a lion. Permit me to share the excerpts of my presentation with you.
INTRODUCTION:
The learned authors of Black’s Law Dictionary, 9th Edition at page 78, define agreement as: “A mutual understanding between two or more persons about their relative rights and duties regarding past or future performances; a manifestation of mutual assent by two or more persons. “The term “agreement” although frequently used as synonymous with the word “contract”, is really an expression of greater breadth of meaning and fewer technicalities. Every contract is an agreement; but not every agreement is a contract. In its colloquial sense, the term “agreement” would include any arrangement between two or more persons intended to affect their relations (whether legal or otherwise) to each other. An accepted invitation to dinner, for example, would be an agreement which is intended to affect the legal relations of the parties and does not necessarily amount to a contract in the strict sense of the term. For instance, a conveyance of land or a gift of a chattel, though involving an agreement, is not a contract, because its primary legal operation is to effect a transfer of property, and not to create an obligation. See Stephen’s Commentaries on the Laws of England 5 (L. Crispin Warmington ed. 21st ed. 1950).
An agreement, as the Courts have said, ‘is nothing more than a manifestation of mutual assent’ by two or more parties of legally competent persons to one another. Agreement is in some respects a broader term than contract, or even than bargain or promise. It covers executed sales, gifts, and other transfers of property.” See Samuel Williston, A Treatise on the Law of Contracts, 2 at 6 (Walter H.E. Jaeger ed., 3rd ed. 1957).” Per JOSEPH TINE TUR, JCA in AKPAN v. UBONG (2013) LPELR-20418(CA) (Pp 53 – 54 Paras B – B). On the other hand, the term property is said to have been derived from the Latin word – ‘Properietate’, and the French equivalent ‘proprius’ which means something that is/can be owned. The word property is inextricably linked to the word ownership, as there can be hardly a property without ownership and ownership without property. The concept of ‘property’ however, does not refer to a thing; it is a description of a legal relationship with a thing. It refers to a degree of power that is recognised in law as power permissibly exercised over the thing. The concept of ‘property’ may be elusive. Usually it is treated as a ‘bundle of rights. In Nigeria for instance, the right to own property is a fundamental right enshrined in the Constitution of the Federal Republic of Nigeria 1999. Sections 43 and 44 (1) of the Constitution provide:-
“43. Subject to the provisions of this Constitution every citizen of Nigeria shall have the right to acquire and own immovable property anywhere in Nigeria.
44-(1) No moveable property or any interest in an immovable property shall be taken possession of compulsorily and no right over or interest in any such property shall be acquired compulsorily in any part of Nigeria except in the manner and purposes prescribed by a law that, among other things- a) requires the prompt payment of compensation therefore; and b) gives to any person claiming such compensation a right of access for the determination of his interest in the property and the amount of compensation to a Court of law or tribunal or body having jurisdiction in that part of Nigeria.”
Similarly, the Indian Supreme Court in Dutt Sharma v. State of Bihar, (15)(1962) 1: S.C J, 395 considered property as a legal concept and observed same to be a bundle of rights’ and in the case of tangible property, it would include the right of possession, the right to enjoy, the right to retain, the right to alienate and the right to destroy. Now, the ordinary dictionary meaning of the word “acquire” is “to gain or get as one’s own by one’s own exertions or qualities”. This implies getting or gaining what was not one’s own (see The Shorter Oxford English Dictionary: Vol. 1 p. 18) See also Webster’s New Twentieth Century Dictionary (2nd Edn.) p. 18. Now that the concept of property is established and property has come into existence, states have enacted numerous legislations to protect, safeguard and control property. Property/assets being worthy of exchange, people started exchanging one kind of property to the other. And slowly after the development of money, nowadays, properties are being exchanged among different individuals through different means. Hence, such transfer of the property would simply mean the legal transfer of the possession and ownership of such property to such person hence depriving this person of every right over such property or several rights according to the type of transfer and agreement made. The concept of property seems to be inexhaustible as anything of value that is capable of being owned or claimed represents property.
WHAT IS AN AGREEMENT?
From the introduction, by the working definition of Blacks’ Law Dictionary, an agreement is a mutual understanding between two or more persons about their relative rights and duties regarding past or future performances; a manifestation of mutual assent by two or more persons. The term ‘agreement’, although frequently used as synonymous with the word ‘contract’ is really an expression of greater breadth of meaning and less technicality. Every contract is an agreement; but not every agreement is a contract… Even an agreement which is intended to affect the legal relations of parties does not necessarily amount to a contract in the strict sense of the term. For instance, a conveyance of land or gift of a chattel, though involving an agreement, is not a contract because its primary legal operation is to transfer property, and not to create an obligation. An agreement, as the Courts have said, ‘is nothing more than a manifestation of mutual assent’ by two or more parties of legally competent persons to one another. See TURAKI v. AKUH (2017) LPELR-44589(CA).
It is a promise or a set of promises the breach of which the law gives a remedy, or the performance of which the law recognizes as a duty. Parties must reach a consensus “ad idem’ for a contract to be regarded as binding and enforceable. The two or more minds of the parties must meet at the same point, event or incident. Where they say different things at different times, they are not ad idem and no valid contract is formed. The meeting of the minds of the contracting parties is the most crucial and overriding factor or determinant in the law of contract. In BEST (NIG.) LTD V. BH (NIG.) LTD. (2011) 5 NWLR Pt.1329 P.95 @ 127, the Nigerian Supreme Court defined a contractual relationship to mean a legally binding agreement between two or more persons by which rights are acquired by one party in return for acts on the part of the other. It is a bilateral affair which requires the ‘ad idem’ of the parties. An agreement or contract, consists of an offer, acceptance, consideration, intention to enter into a business relationship and absence of any vitiating factor, containing terms, the performance of which may be enforced by the Court of law, with any breach attracting sanctions. See LIVINGSTONE v. DADAH (2021) LPELR-56303(CA). See also, Orient Bank (Nig.) Plc v. Bilante Int’l Ltd. [1997] 8 NWLR (Pt. 515) 37; and Anuruba V. E.C.B Ltd (2005) 10 NWLR, pt.933.”
Another form or feature of agreement is “A Covenant”. A covenant is an agreement creating an obligation contained in a deed or legal documents. It may be positive, stipulating the performance of some act or the payment of money, or negative or restrictive, forbidding the commission of some act. Covenants may be used to serve the purpose of a bond. Also worthy of mention, is the concept of condition or condition precedent. “By the word ‘condition’ this means the agreement is not a finality until a certain event happens. This is the effect of condition precedent in a document. In BURTON RESOURCES LTD & ANOR v. FIRST DEEPWATER DISCOVERY LTD (2021) LPELR-54429 (CA), “Once there is a condition that needs to be satisfied before an agreement will come into force, the general position of the law is that such a condition becomes condition precedent. The non-existence of the condition will be an obstacle to the enforcement of the agreement and will prevent anyone from getting any benefit from the agreement. Condition precedent has been defined as one which delays the vesting of a right until the happening of an event. See NIGERCARE DEVELOPMENT CO., LTD v. ADAMAWA STATE WATER BOARD & ORS (2008) 2-3 S.C (pt. II) 202. The implication of a condition precedent is that none of the parties can benefit from the agreement or claim any right therein without the fulfilment of the condition precedent. In this regard, the Nigerian Supreme Court case of TSOKWA OIL MARKETING CO (NIG.) LTD v. BANK OF THE NORTH LTD (2002) 11 NWLR Ltd (pt. 777) 163 is instructive. The apex Court held thus: “It is trite law that once a condition precedent is incorporated into an agreement, that condition precedent must be fulfilled before the effect can flow.’’ When parties have entered into what, in law, is a conditional contract or agreement, the condition precedent must happen before either party becomes bound by the contract. In the other words, the condition must be fulfilled before the effect can follow.
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