Agreements in property acquisition and development – Part 2

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

To be continued

Adegboruwa is a Senior Advocate of Nigeria (SAN)