Last week, I started a series of sharing papers delivered at the General Meeting Interactive Session of the International Real Estate Federation of Nigeria held at the Federal Palace Hotel, Lagos. The purpose of this is to guide investors and key stakeholders in this critical sector in order to avoid the pitfalls plaguing transactions conducted for the acquisition and development of land. Given the importance of housing to our national development, property acquisition and development have become real issues to contend with in Nigeria. This is why the Land Use Act has been inserted into the Constitution, even though it has made the process more cumbersome than was otherwise intended. The governors of the various States have become lords of some sort in the allocation and acquisition of land to the extent that the faint-hearted would dare not venture into this business. A lot of fraud, scam and manipulation is being perpetrated by unscrupulous persons who now run the inglorious profession of land grabbing, to the extent that almost seventy percent of cases in the police stations have to do with land. Our courts are daily inundated with cases upon cases involving land transactions. This should not be so if things are done properly. Let us now continue with the paper.
There are two general types of contract or an agreement; implied or express. An implied contract or agreement is the opposite of an express agreement.
An Implied Agreement: It is a contract which is assumed to exist or inferred from the actions, conduct and circumstances of the parties. An implied agreement is an obligation between two or more parties in the absence of a written contract, based on the interest of fairness implied by circumstance or conduct. An implied contract is inconsistent with an express agreement, the terms and conditions of which are in writing. There cannot be an implied agreement or contract where a party fails or refuses or neglects to comply with a term of a written agreement. An implied contract is usually treated in law as a contract only for the purpose of giving a remedy to a party whose action or conduct has benefited another in circumstances where without the remedy the benefiting party will be unfairly enriched by the action or service rendered by the other party. In law, the burden is on the party asserting an implied contract to prove an unjust enrichment by the other party and the necessity to imply a contract. The circumstances are never static.
An Express Agreement: This is where either written or verbal terms are employed to bring the contract to fruition. It is usually in a written form, voluntarily entered into by the parties upon negotiated and agreed terms and conditions and often reduced into a written document. It is the often-printed document signed by both parties involved in a deal that is referred to as an express agreement. The parties are the assignor and assignee; seller and purchaser or vendor, as the case may be.
Unilateral and Bilateral Agreements: Unilateral contracts involve only one party who promises to take an action or provide something of value. These are also known as one-sided contracts, and a common example of them is when a reward is offered for something being found: the party to whom the reward is offered is under no obligation to find the lost item, but if he does find it, the offering party is under contract to provide the reward. Bilateral contracts, on the other hand, involve both parties agreeing to exchange items or services of value. These are also known as two-sided contracts and are the kind of contract most commonly encountered. They usually would involve more than one person.
Unconscionable Contracts: Unconscionable contracts are contracts that are considered unjust by being unfairly weighted to give advantage to one side over the other. Examples of elements that may make a contract unconscionable include: a limit on the damages a party may receive for breach of contract, a limit on the rights of a party to seek satisfaction in court, an inability to have a warranty honored, etc. Whether or not a contract is unconscionable is a matter left for interpretation by the courts. They usually rule a contract to be unconscionable if it is perceived as being a contract that no mentally able person would sign, that no honest person would offer, or that would undermine the court’s integrity where it was enforced.
Adhesion Contracts: An adhesion contract is one that is drafted by a party with a great deal of more bargaining power than the other party, meaning that the weaker party may only accept the contract or not. Often called “take it or leave it” contracts; these contracts lack much, if any, negotiation, since one party will have little to nothing to negotiate with. Such contracts should not be confused with unconscionable contracts, since a lack of bargaining power does not necessarily mean that the terms set out will be unfair. That said, courts may still not enforce adhesion contracts if they believe a meeting of the minds never existed.
Aleatory Contracts: These are agreements that are not triggered until an outside event occurs. Insurance policies would be examples of this, as they are agreements involving fiscal protection in the face of unpredictable events. In such contracts, both sides assume risks; the insured that they are paying for a service they will never receive, and the insurer that they must pay out potentially more than they receive from the insured.
Option Contracts: This contract allows a party to enter another contract with another party at a later time. Entering into a second contract is called exercising the option, and a good example of this is in real estate, where a prospective buyer will pay a seller to take a property off the market, then, at a later date, have a new contract made to buy the property outright, should they choose to do so.
Fixed Price Contracts: Fixed price contracts involve a buyer and seller agreeing on a fixed price to be paid for a project. Also known as lump sum contracts, these contracts entail a great deal of risk for the seller, since if the project takes longer or is more extensive than anticipated, they will still only be paid the agreed-upon price.
Memorandum of Understanding: Mou is commonly used as a confirmation of agreed-upon terms when an oral agreement is reduced into writing. It sets forth the basic principles and guidelines under which the parties will work together to accomplish their goals. It is uniquely tailored to each individual circumstance and may be funded or unfunded. It is also known as a Memorandum of Agreement.
Non-Disclosure Agreement: A legally binding agreement to treat specific shared information as confidential, proprietary or trade secret and not to disclose it to others without proper authorization. It is Mason policy to require Principal Investigators to sign these agreements acknowledging their responsibilities to safeguard such confidential information during the course of preliminary discussions or any research projects.
Teaming Agreement: An agreement involving two parties who wish to combine resources to submit a proposal for a government contract. The agreement will specify which party will serve as the prime award recipient and which will serve as the sub-award recipient should the proposal be selected for funding. The prime award recipient is then legally obligated to issue a sub-award to the sub-recipient within a reasonable amount of time after receipt of award.
Material Transfer Agreement: These are used to document and govern the transfer of biological or other scientific materials from one party to another for research purposes. They typically address conditions of use and royalties or intellectual property rights that may result from such use.
Idiq/Master Agreement: An indefinite delivery indefinite quantity contract is issued when a sponsor has identified a need for services, but does not know precisely how or when these services will be required. The terms and conditions of this master agreement are negotiated and accepted by both parties but it does not contain a statement of work or any funding. As the sponsor identifies a need, it will issue a task order awarding the funds for the particular task and specifying the exact work to be done in a statement of work.
Consultancy Agreement: An agreement for the purpose of acquiring the professional services of an individual with knowledge and expertise in a specified field. Consultants are considered independent contractors rather than subcontractors or employees. They are often employed by professionals to define the scope of engagement and remuneration by their clients.